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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 15, 1997
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HEARTPORT, INC.
(Exact name of registrant as specified in charter)
Delaware 0-28266 94-3222307
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(State or other jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
200 Chesapeake Drive, Redwood City, California 94063
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(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code: (415) 306-7900
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Not applicable
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS
On April 18, 1997, Heartport, Inc. ("Heartport") announced the
closing of its previously announced offering of convertible subordinated
notes to qualified institutional investors in the United States. The Company
sold $75 million of convertible subordinated notes (excluding the option to
purchase up to an additional $11.25 million principal amount of notes to
cover over-allotments, if any). The notes have a term of seven years with an
interest rate of 7 1/4 percent per year and will be convertible into
Heartport Common Stock at a price of $28.958 per share. No other terms were
disclosed.
Heartport stated that it expects to use the net proceeds of the
offering for funding of capital expenditures related to the expansion of its
manufacturing capacity and facilities, sales and marketing activities,
research and development, clinical trials, working capital and general
corporate purposes.
The securities offered were not registered under the Securities Act
of 1933, as amended, or applicable state securities laws, and may not be
offered or sold in the United States absent registration under the Securities
Act of 1933 and applicable state securities laws or available exemptions from
registration requirements.
ITEM 7. EXHIBITS
(c) EXHIBITS:
Exhibit
Number
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1.2 Placement Agreement dated April 15, 1997 by and between
Heartport, Inc., Morgan Stanley & Co. Incorporated, Goldman
Sachs & Co. and Cowen & Company.
4.5 Indenture dated April 15, 1997 by and between Heartport, Inc.
and The Bank of New York.
4.6 Registration Rights Agreement dated April 15, 1997 by and
between Heartport, Inc., Morgan Stanley & Co. Incorporated,
Goldman Sachs & Co. and Cowen & Company.
4.7 Form of Amendment No. 1 to Rights Agreement.
99.1 April 15, 1997 Press Release: "Heartport, Inc. Announces
Offering of Convertible Subordinated Notes."
99.2 April 18, 1997 Press Release: "Heartport Raises $75 Million
through Offering of Convertible Subordinated Notes."
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
None of the securities in the above referenced transaction were sold in
reliance upon Regulation S of the Securities Act of 1933, as amended.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
HEARTPORT, INC.
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(Registrant)
Date: April 30, 1997 By: /s/ David B. Singer
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Name: David B. Singer
Title: Senior Vice President, Finance and
Chief Financial Officer
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EXHIBIT INDEX
DESCRIPTION OF DOCUMENT
Exhibit
Number
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1.2 Placement Agreement dated April 15, 1997 by and between
Heartport, Inc., Morgan Stanley & Co. Incorporated, Goldman
Sachs & Co. and Cowen & Company.
4.5 Indenture dated April 15, 1997 by and between Heartport, Inc.
and The Bank of New York.
4.6 Registration Rights Agreement dated April 15, 1997 by and
between Heartport, Inc., Morgan Stanley & Co. Incorporated,
Goldman Sachs & Co. and Cowen & Company.
4.7 Form of Amendment No. 1 to Rights Agreement.
99.1 April 15, 1997 Press Release: "Heartport, Inc. Announces
Offering of Convertible Subordinated Notes."
99.2 April 18, 1997 Press Release: "Heartport Raises $75 Million
through Offering of Convertible Subordinated Notes."
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HEARTPORT, INC.
PLACEMENT AGREEMENT
April 15, 1997
Morgan Stanley & Co. Incorporated
Goldman, Sachs & Co.
Cowen & Company
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs:
Heartport, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell to you (the "Initial Purchasers") $75,000,000 principal amount of
its 7.25% Convertible Subordinated Notes Due 2004 (the "Firm Offered
Securities") to be issued pursuant to the provisions of an Indenture dated as of
April 14, 1997 (the "Indenture") between the Company and The Bank of New York,
as Trustee (the "Trustee").
The Company also proposes to issue and sell to the Initial Purchasers
not more than an additional $11,250,000 principal amount of its 7.25%
Convertible Subordinated Notes Due 2004 (the "Additional Offered Securities") if
and to the extent that you, as the Initial Purchasers, shall have determined to
exercise the right to purchase such 7.25% Convertible Subordinated Notes Due
2004 granted to the Initial Purchasers in Section 3 hereof. The Firm Offered
Securities and the Additional Offered Securities are hereinafter collectively
referred to as the "Offered Securities." The Offered Securities will be
convertible into shares of Common Stock, $0.001 par value of the Company (the
"Underlying Securities" and, together with the Offered Securities, the
"Securities").
The Securities will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance on
exemptions therefrom.
In connection with the sale of the Securities, the Company has
prepared a final offering memorandum (the "Memorandum") setting forth or
including a description of the terms of the Securities, the terms of the
offering, a description of the Company and any material developments relating to
the Company occurring after the date of the most recent financial statements
included or incorporated by reference therein. As used herein, the term
"Memorandum" shall include the documents incorporated by reference therein. The
terms "supplement," "amendment" and "amend" as used herein shall include all
documents deemed to be incorporated by reference in the Memorandum that is filed
subsequent to the date of such Memorandum with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
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1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to, and agrees with you, that as of the date hereof:
(a) (i) Each document, if any, filed or to be filed pursuant to
the Exchange Act and incorporated by reference in the Memorandum complied or
will comply when so filed in all material respects with the Exchange Act and the
applicable rules and regulations thereunder, and, (ii) the Memorandum, in the
form used by the Initial Purchasers to confirm sales and on the Closing Date,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this Section 1(a) do not apply to
statements or omissions in the Memorandum based upon information relating to the
Initial Purchasers furnished to the Company in writing by the Initial Purchasers
expressly for use therein.
(b) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of Delaware, has
the corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(c) The Company does not own or control, directly or indirectly,
any interest in any other corporation, association, or other business entity.
(d) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Memorandum.
(e) The shares of Common Stock outstanding on the date hereof
have been duly authorized and are validly issued, fully paid and nonassessable.
(f) This Agreement has been duly authorized, executed and
delivered by the Company.
(g) The Offered Securities have been duly authorized and, when
executed by the Company, authenticated by the Trustee in accordance with the
provisions of the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, will (i) be valid and
binding obligations of the Company enforceable in accordance with their terms,
except as the enforceability thereof may be limited by (A) bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (B) general
equitable principles of general applicability and (ii) be entitled to the
benefits of the Indenture pursuant to which such securities are to be issued.
(h) The Underlying Securities reserved for issuance upon
conversion of the Offered Securities have been duly authorized and reserved and,
when issued upon conversion of such Offered Securities in accordance with the
terms of such Offered Securities,
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will be validly issued, fully paid and non-assessable and the issuance thereof
will not be subject to any preemptive rights or similar rights.
(i) Each of the Indenture and the Registration Rights Agreement
dated as of April 15, 1997 among the Company and the Initial Purchasers (the
"Registration Rights Agreement") has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company, enforceable
in accordance with its terms except as the enforceability thereof may be limited
by (x) bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (y) equitable principles of general applicability.
(j) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement, the
Indenture, the Registration Rights Agreement and the Offered Securities will not
contravene any provision of applicable law or the certificate of incorporation
or bylaws of the Company, or to the extent such contravention would have a
material adverse effect upon the Company and its subsidiaries, taken as a whole,
any agreement or other instrument binding upon the Company, or any judgment,
order or decree of any governmental body, agency or court having jurisdiction
over the Company, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, the
Indenture, Registration Rights Agreement or the Offered Securities, except such
as may be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Securities and except as may be
required under federal and state securities laws with respect to the Company's
obligations under the Registration Rights Agreement.
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company, from that set forth in the Memorandum.
(l) There are no legal or governmental proceedings pending or,
to the knowledge of the Company, threatened to which the Company is a party or
to which any of the properties of the Company is subject and which, if adversely
decided, would have a material adverse effect on the Company, or on the power or
ability of the Company to perform its obligations under this Agreement, the
Indenture, the, Registration Rights Agreement or the Offered Securities or to
consummate the transactions contemplated by the Memorandum.
(m) The Company possesses all consents, approvals, orders,
certificates, authorizations and permits issued by and has made all declarations
and filings with, all appropriate federal, state or foreign governmental or
self-regulatory authorities and all courts and other tribunals necessary to
conduct its business and to own, lease, license and use its properties in the
manner described in the Memorandum, and the Company has not received any notice
of proceedings related to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate, if the
subject of any unfavorable decision, ruling or finding, or failure to obtain or
file, would have a material adverse effect on the
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Company and its subsidiaries, taken as a whole, except as described in or
contemplated by the Memorandum.
(n) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(o) Except as described in the Memorandum, the Company owns or
possesses adequate licenses or other rights to use all patents, copyrights,
trademarks, service marks, trade names, technology and know-how necessary (in
any material respect) to conduct its business in the manner described in the
Memorandum and, except as disclosed in the Memorandum, the Company has not
received any notice of infringement or conflict with (and the Company knows of
no infringement or conflict with) asserted rights of others with respect to any
patents, copyrights, trademarks, service marks, trade names, technology or
know-how which could result in any material adverse effect upon the Company and,
except as disclosed in the Memorandum, the discoveries, inventions, products or
processes of the Company referred to in the Memorandum do not, to the best
knowledge of the Company, infringe or conflict with any right or patent of any
third party, or any discovery, invention, product or process which is the
subject of a patent application filed by any third party, known to the Company
which could have a material adverse effect on the Company.
(p) Subsequent to the date of the Memorandum, (i) the Company
has not incurred any material liability or obligation, direct or contingent, nor
entered into any material transaction not in the ordinary course of business;
(ii) the Company has not purchased any of its outstanding capital stock, nor
declared, paid or otherwise made any dividend or distribution of any kind on its
capital stock other than ordinary and customary dividends; and (iii) there has
not been any material change in the capital stock, short-term debt or long-term
debt of the Company, except in each case as described in or contemplated by the
Memorandum.
(q) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act, an "Affiliate") of the Company
has directly, or through any agent, (i) sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the sale of the Offered
Securities in a manner that would require the registration under the Securities
Act of the offered securities or (ii) engaged in any form of general
solicitation or general advertising in connection with the offering of the
Offered Securities (as those terms are used in Regulation D under the Securities
Act) , or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act.
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(r) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(s) Assuming the representations and warranties of each of the
Initial Purchasers in Section 6 hereof are true and compliance by the Initial
Purchasers with the covenants made by it in such Section 6, it is not necessary
in connection with the offer, sale and delivery of the Offered Securities to the
Initial Purchasers in the manner contemplated by the Agreement to register the
Offered Securities under the Securities Act or to qualify the Indenture under
the Trust Indenture Act of 1939, as amended.
(t) There is no owner of any securities of the Company who has
any rights, not effectively satisfied or waived, to require registration of any
shares of capital stock of the Company in connection with the filing of a
registration statement pursuant to the provisions of the Registration Rights
Agreement or the sale of any shares thereunder.
(u) The Company (i) is in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (collectively, "Environmental
Laws"), (ii) has received all permits, licenses or other approvals required of
it under applicable Environmental Laws to conduct their respective businesses
and (iii) is in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(v) In the ordinary course of its business, the Company
conducts, from time to time, a review of the effect of Environmental Laws on the
business, operations and properties of the Company, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review, the Company has
reasonably concluded that such associated costs and liabilities would not,
singly or in the aggregate, have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(w) No material labor dispute with the employees of the Company
exists, except as described in or contemplated by the Memorandum, or, to the
best knowledge of the Company, is imminent; and the Company is not aware of any
existing, threatened or imminent labor disturbance by the employees of any of
its principal suppliers, manufacturers or contractors that could result in any
material adverse effect on the Company or its subsidiaries, taken as a whole.
(x) None of the Company, its Affiliates or any person acting on
its or their behalf (other than the Initial Purchasers) has engaged in any
directed selling efforts (as that
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term is defined in Regulation S under the Securities Act ("Regulation S")) with
respect to the Offered Securities and the Company and its Affiliates and any
person acting on its or their behalf (other than the Initial Purchasers) has
complied with the offering restrictions requirement of Regulation S.
(y) The Notes satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act.
2. OFFERING. You have advised the Company that you, as the Initial
Purchasers, will make an offering of the Offered Securities purchased by you
hereunder on the terms to be set forth in the Memorandum, as soon as practicable
after this Agreement is entered into as in your judgment is advisable.
3. PURCHASE AND DELIVERY. The Company hereby agrees to sell to the
Initial Purchasers, and the Initial Purchasers, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees to purchase from the Company the Firm Offered
Securities at a purchase price of 97% of the principal amount thereof plus
accrued interest, if any, from April 18, 1997 to the date of payment and
delivery.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Initial Purchasers the Additional Offered Securities, and the Initial
Purchasers shall have a one-time right to purchase up to $11,250,000 principal
amount of Additional Offered Securities at a purchase price of 97% of the
principal amount thereof plus accrued interest, if any, from April 18, 1997 to
the date of payment and delivery. Additional Offered Securities may be
purchased as provided in this Section 3 solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Offered
Securities.
The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co., Incorporated, it will not, during the period ending 90
days after the date of the Memorandum, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or (ii) enter
into any swap or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Securities to be sold hereunder, (B) the
issuance by the Company of any securities upon the exercise of an option or
warrant or the conversion of a security outstanding on the date hereof or
(C) stock options not exercisable during such period granted by the Company
under the Company's 1996 Stock Option Plan (the "1996 Plan"), as in effect on
the date hereof.
Payment for the Firm Offered Securities shall be made against delivery
of the Firm Offered Securities at a closing to be held at the office of
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, 155 Constitution
Drive, Menlo Park, California 94025 at
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10:00 A.M., local time, on April 18, 1997, or at such other time on the same or
such other date, not later than May 18, 1997, as shall be designated in writing
by you. The time and date of such payment are herein referred to as the Closing
Date. Payment for the Firm Offered Securities shall be made to the Company in
immediately available funds.
Payment for any Additional Offered Securities shall be made against
delivery of the Additional Offered Securities at a closing to be held at the
office of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP,
155 Constitution Drive, Menlo Park, California 94025 at 10:00 A.M., local time,
on such date (which may be the same as the Closing Date but shall in no event be
earlier than the Closing Date, nor earlier than two (2) business days nor later
than ten business days after the giving of the notice hereinafter referred to)
as shall be designated in a written notice from the Initial Purchasers to the
Company of its determination to purchase a number, specified in said notice, of
Additional Offered Securities, or on such other date, in any event not later
than May 18, 1997 as shall be designated in writing by the Initial Purchasers.
The time and date of such payment are hereinafter referred to as the Option
Closing Date. Payment for the Additional Offered Securities shall be made to
the Company in immediately available funds. The notice of the determination to
exercise the option to purchase Additional Offered Securities and of the Option
Closing Date may be given at any time within 30 days after the date of this
Agreement.
Certificates for the Offered Securities shall be in definitive form or
global form, as specified by you, and registered in such names and in such
denominations as you shall request in writing not less than two full business
days prior to the Closing Date or the Option Closing Date, as the case may be.
The certificates evidencing the Offered Securities shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the account
of the Initial Purchasers, with any transfer taxes payable in connection with
the transfer of the Offered Securities to the Initial Purchasers duly paid,
against payment of the purchase price therefor.
4. CONDITIONS TO CLOSING. The obligations of the Initial Purchasers
under this Agreement to purchase the Firm Offered Securities will be subject to
the accuracy of the representations and warranties on the part of the Company
herein, to the performance and observance by the Company in all material
respects of all covenants and agreements herein, contained on its part to be
performed and observed and the following conditions:
(a) Subsequent to the date of this Agreement and prior to the
Closing Date,
(i) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's securities by any
"nationally recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations, of the Company, from that
set forth in the Memorandum that, in
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your judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Offered Securities on the terms and in the manner
contemplated in the Memorandum.
(b) You shall have received on the Closing Date a certificate,
dated the Closing Date and signed by an executive officer of the Company, to the
effect set forth in clause (a) (i) above and to the effect that the
representations and warranties of the Company contained in this Agreement are
true and correct as of the Closing Date and that the Company has complied with
all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his knowledge as to proceedings threatened.
(c) You shall have received on the Closing Date an opinion of
Gunderson Dettmer Stough Villeneuve Franklin and Hachigian, LLP, counsel for the
Company, dated the Closing Date, to the effect set forth in EXHIBIT A.
(d) You shall have received on the Closing Date an opinion of
Simpson Thacher & Bartlett, special counsel to the Company, dated the Closing
Date, to the effect set forth in EXHIBIT B.
(e) You shall have received on the Closing Date an opinion of
Wilson Sonsini Goodrich & Rosati, counsel for the Initial Purchasers, dated the
Closing Date, to the effect set forth in EXHIBIT C.
(f) You shall have received on the Closing Date an opinion of
Townsend & Townsend and Crew, patent counsel for the Company, dated the Closing
Date, to the effect that:
(i) Such counsel represents the Company in certain matters
relating to intellectual property, including patents and certain trademark
matters;
(ii) Such counsel is familiar with the technology used by
the Company in its business and the manner of its use and has read the portions
of the Memorandum "Risk Factors -- Uncertainty Regarding Patents and Protection
of Proprietary Technology; Risks of Future Litigation" and "Business --
Intellectual Property and Other Proprietary Rights" (collectively, the
"Intellectual Property Portion");
(iii) The Intellectual Property Portion contains accurate
descriptions of the Company's patent applications, issued and allowed patents,
and patents licensed to the Company and fairly summarizes the legal matters,
documents and proceedings relating thereto;
(iv) Based upon a review of the third party rights made
known to counsel and discussions with Company scientific personnel, such counsel
is not aware of any valid United States or foreign patent that is or would be
infringed by the activities of the
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Company in the manufacture, use or sale of any presently proposed product, as
described in the Memorandum.
(v) Such counsel has reviewed the Company's patent
applications filed in the U.S. and outside the U.S. (the "Applications") and the
Applications have been properly prepared and filed on behalf of the Company, and
are being diligently pursued by the Company; the inventions described in the
Applications are assigned or licensed to the Company; to such counsel's
knowledge, except for patents where the Company has obtained a field of use
license, no other entity or individual has any right or claim in any of the
inventions, Applications, or any patent to be issued therefrom, and in such
counsel's opinion each of the Applications discloses patentable subject matter;
and
(vi) Such counsel is aware of no pending or threatened
judicial or governmental proceedings relating to patents or proprietary
information to which the Company is a party or of which any property of the
Company is subject and such counsel is not aware of any pending or threatened
action, suit or claim by others that the Company is infringing or otherwise
violating any patent rights of others, nor is such counsel aware of any rights
of third parties to any of the Company's inventions described in the
Applications, issued, approved or licensed patents which could reasonably be
expected to materially affect the ability of the Company to conduct its business
as described in the Memorandum, including the commercialization of its
Endovascular Cardiopulmonary Bypass System, Port-Access CABG System, Port-Access
MVR System, Port-Access AVR System and other port-access products currently
under development; and
(vii) Such counsel has no reason to believe that the
information contained in the Intellectual Property Portion of the Memorandum
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(g) You shall have received on the Closing Date an opinion of
Covington & Burling, regulatory affairs counsel for the Company, dated the
Closing Date, to the effect that
(i) Such counsel represents the Company in certain matters
relating to the United States Federal Food Drug and Cosmetic Act (the "FFDC
Act") and related government regulatory matters.
(ii) Such counsel is familiar with the technology of the
Company and has read the portions of the Memorandum entitled "Risk Factors -- No
Assurance of Regulatory Clearance or Approval; Significant Domestic and
International Regulation," "Business--Regulatory Status," and
"Business--Government Regulation" (the "Regulatory Portion"), and in such
counsel's opinion, insofar as the Regulatory Portion constitutes a description
of the FFDC Act and discussions of FDA regulations or other requirements, the
Regulatory Portion is accurate and complete in all material respects.
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(iii) Such counsel has no reason to believe that the
Regulatory Portion contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
(h) You shall have received, on each of the date hereof and the
Closing Date, a letter, dated the date hereof or the Closing Date, as the case
may be, in form and substance satisfactory to you, from Ernst & Young LLP,
independent public accountants, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in or incorporated by reference into each Memorandum; provided that the letter
delivered on the Closing Date use a "cut-off date" not earlier than the date
hereof.
(i) The "lock-up" agreements between you and certain
shareholders, officers and directors of the Company relating to sales and
certain other dispositions of shares of Common Stock or certain other
securities, delivered to you on or before the date hereof, shall be in full
force and effect on the Closing Date.
(j) The Company shall have complied with the provisions of
Section 6(a) hereof with respect to the furnishing of the Memorandum on the
business day next succeeding the date of this Agreement, in such quantities as
you reasonably request.
(k) The Company shall have amended or terminated its Loan and
Security Agreement with Silicon Valley Bank entered into as of December 31, 1996
to the satisfaction of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, counsel to the Initial Purchasers.
(l) The Company shall have amended the Rights Agreement (as
defined in the Memorandum) to provide that such Rights shall be issued to
holders of the Securities who convert the Securities into Underlying Securities
subsequent to the Distribution Date (as defined in the Rights Agreement).
The Initial Purchasers' obligation to purchase Additional Offered
Securities hereunder is subject to the delivery to you on the Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Offered Securities and other matters related to the issuance of the Additional
Offered Securities.
5. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Initial Purchasers contained in this Agreement, the Company
covenants as follows:
(a) To furnish to you, without charge, during the period
mentioned in paragraph (c) below, as many copies of the Memorandum, any
documents incorporated by reference therein and any supplements and amendments
thereto as you may reasonably request.
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<PAGE>
(b) Before amending or supplementing the Memorandum, to furnish
to you a copy of each such proposed amendment or supplement and not to use any
such proposed amendment or supplement to which you reasonably object.
(c) If, during such period after the date hereof and prior to
the date on which all of the Offered Securities shall have been sold by the
Initial Purchasers, any event shall occur or condition exist as a result of
which it is necessary in your good faith judgment to amend or supplement the
Memorandum in order to make the statements therein, in the light of the
circumstances when such Memorandum is delivered to a purchaser, not misleading,
or if, in the opinion of counsel to the Initial Purchasers it is necessary to
amend or supplement the Memorandum to comply with applicable law, forthwith to
prepare and furnish, at its own expense, to the Initial Purchasers, either
amendments or supplements to the Memorandum so that the statements in the
Memorandum as so amended or supplemented will not, in the light of the
circumstances when the Memorandum is delivered to a purchaser, be misleading or
so that the Memorandum, as so amended or supplemented, will comply with
applicable law.
(d) To cooperate with the Initial Purchasers and its counsel in
connection with the qualification of the Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) Whether or not any sale of such Offered Securities is
consummated, to pay all expenses incident to the performance of its obligations
under this Agreement, including: (i) the preparation of the Memorandum and all
amendments and supplements thereto, (ii) the preparation, issuance and delivery
of the Securities, (iii) the fees and disbursements of the Company's counsel and
accountants and the Trustee and its counsel, unless otherwise agreed to between
the Company and the Trustee, provided that in no event will the Initial
Purchasers be responsible for the fees of the Trustee and its counsel, (iv) the
qualification of such Securities under securities or Blue Sky laws in accordance
with the provisions of Section 5(d), including filing fees and the fees and
disbursements of counsel for the Initial Purchasers in connection therewith and
in connection with the preparation of any Blue Sky or legal investment memoranda
(v) the printing and delivery to the Initial Purchasers in quantities as
hereinabove stated of copies of the Memorandum and any amendments or supplements
thereto, (vi) any fees charged by rating agencies for the rating of such
Securities and (vii) the fees and expenses, if any, incurred in connection with
the admission of such Securities for trading in any appropriate market system.
(f) Neither the Company nor any Affiliate will sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the Securities Act) which could be integrated with the sale of
the Offered Securities in a manner which would require the registration under
the Securities Act of such Securities.
(g) Not to solicit any offer to buy or offer or sell the Offered
Securities by means of any form of general solicitation or general advertising
(as those terms are used in Regulation D under the Securities Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act.
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(h) While any of the Offered Securities remain "restricted
securities" within the meaning of the Securities Act, to make available, upon
request, to any seller of such Offered Securities the information specified in
Rule 144A(d) (4) under the Securities Act, unless the Company is then subject to
Section 13 or 15(d) of the Exchange Act.
(i) If requested by you, to use its best efforts to permit the
Offered Securities to be designated PORTAL securities in accordance with the
rules and regulations adopted by the National Association of Securities Dealers,
Inc. relating to trading in the PORTAL Market.
(j) None of the Company, its Affiliates or any person acting on
its or their behalf (other than the Initial Purchasers) will engage in any
directed selling efforts (as that term is defined in Regulation S) with respect
to the Offered Securities, and the Company and its Affiliates and each person
acting on its or their behalf (other than the Initial Purchasers) will comply
with the offering restrictions of Regulation S.
(k) The Company shall amend or terminate its Loan and Security
Agreement with Silicon Valley Bank entered into as of December 31, 1996 to the
satisfaction of Wilson Sonsini Goodrich & Rosati, Professional Corporation,
counsel to the Initial Purchasers.
(l) The Company shall amend its Rights Agreement as defined in
the Memorandum to provide that such Rights shall be issued to holders of the
Securities who convert the Securities to Underlying Securities subsequent to the
Distribution Date as defined in the Rights Agreement.
(m) The Company shall use its best efforts to have obtained a
rating of the Securities by a nationally recognized rating agency on or prior to
ninety (90) days after the date of the Memorandum.
6. OFFERING OF SECURITIES: RESTRICTIONS ON TRANSFER.
(a) Each of the Initial Purchasers represents and warrants that
it is a qualified institutional buyer as defined in Rule 144A under the
Securities Act (a "QIB"). Each of the Initial Purchasers agrees with the
Company that (a) it will not solicit offers for, or offer to sell, such Offered
Securities by any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act and (b) it will solicit offers for such Offered Securities only from, and
will offer such Offered Securities only to, persons that it reasonably believes
to be (A) in the case of offers inside the United States, (i) QIBs or (ii) other
institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act ("institutional accredited investors") that, prior
to their purchase of the Offered Securities, deliver to the Initial Purchasers a
letter containing the representations and agreements set forth in Annex A to the
Memorandum and (B) in the case of offers outside the United States, to persons
other than U.S. persons ("foreign purchasers," which term shall include dealers
or other professional fiduciaries in the United States acting on a discretionary
basis for foreign
12
<PAGE>
beneficial owners (other than an estate or trust)) in reliance upon Regulation S
under the Securities Act.
(b) Each of the Initial Purchasers represents, warrants, and
agrees with respect to offers and sales that:
(i) it understands that no action has been or will be taken
in any jurisdiction by the Initial Purchasers that would permit a public
offering of the Offered Securities, or possession or distribution of the
Memorandum or any other offering or publicity material relating to the Offered
Securities, in any country or jurisdiction where action for that purpose is
required;
(ii) each of the Initial Purchasers will comply with all
applicable laws and regulations in each jurisdiction in which it acquires,
offers, sells or delivers Offered Securities or has in its possession or
distributes the Memorandum or any such other material, in all cases at its own
expense;
(iii) the Offered Securities have not been registered under
the Securities Act and may not be offered or sold within the United States or
to, or for the account or benefit of, U.S. persons except in accordance with
Rule 144A or Regulation S under the Securities Act or pursuant to another
exemption from the registration requirements of the Securities Act;
(iv) each of the Initial Purchasers has not offered the
Offered Securities and will not offer and sell the Offered Securities (A) as
part of their distribution at any time and (B) otherwise until 40 days after the
later of the commencement of the offering and the Closing Date (or Option
Closing Date, if later), only in accordance with Rule 903 of Regulation S or as
otherwise permitted in paragraph (a) above. Accordingly, neither the Initial
Purchasers, their Affiliates nor any persons acting on their behalf have engaged
or will engage in any directed selling efforts (within the meaning of
Regulation S) with respect to the Offered Securities, and the Initial
Purchasers, its Affiliates and any such persons have complied and will comply
with the offering restrictions requirement of Regulation S;
(v) each of the Initial Purchasers has (1) not offered or
sold and will not offer or sell any Offered Securities to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995
("Regulations"); (2) complied and will comply with all applicable provisions of
the Financial Services Act 1986 and the Regulations with respect to anything
done by it in relation to the Offered Securities in, from or otherwise involving
the United Kingdom; and (3) only issued or passed on and will only issue or pass
on to any person in the United Kingdom any document received by it in connection
with the issue of the Offered Securities if that person is of a kind described
in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
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<PAGE>
(Exemptions) Order 1995 or is a person to whom such document may otherwise
lawfully be issued or passed on;
(vi) each of the Initial Purchasers understands that the
Offered Securities have not been and will not be registered under the Securities
and Exchange Law of Japan, and represents that it has not offered or sold, and
agrees that it will not offer or sell, any Offered Securities, directly or
indirectly in Japan or to or from any resident of Japan except (i) pursuant to
an exemption from the registration requirements of the Securities and Exchange
Law of Japan and (ii) in compliance with any other applicable requirements of
Japanese law; and
(vii) each of the Initial Purchasers agrees that, at or
prior to confirmation of sales of the Offered Securities, it will have sent to
each distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases Offered Securities from it during the restricted
period a confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered
and sold within the United States or to, or for the account or benefit
of, U.S. persons (i) as part of their distribution at any time or
(ii) otherwise until 40 days after the later of the commencement of
the offering and the closing date, except in either case in accordance
with Regulation S (or Rule 144A if available) under the Securities
Act. Terms used above have the meaning given to them by Regulation S."
Terms used in this Section 6 have the meanings given to them by Regulation S.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Initial Purchaser, and each person, if any, who controls any Initial Purchasers
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred by the Initial Purchasers or any such controlling person in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Memorandum (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact necessary to make the statements
therein in light of the circumstances under which they were made not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to any Initial Purchasers furnished to the Company in
writing by any Initial Purchasers expressly for use therein.
(b) Each Initial Purchaser agrees, severally and not jointly, to
indemnify and hold harmless the Company, the directors of the Company, the
officers of the Company who sign the Memorandum and each person, if any, who
controls the Company within
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<PAGE>
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Memorandum (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Initial Purchaser
furnished to the Company in writing by such Initial Purchaser through you
expressly for use in the Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or (b) above, such
person (the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all such indemnified parties and that all
such fees and expenses shall be reimbursed as they are incurred. Such firm
shall be designated in writing by Morgan Stanley & Co. Incorporated in the case
of parties indemnified pursuant to paragraph (a) above and by the Company in the
case of parties indemnified pursuant to paragraph (b) above. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought
15
<PAGE>
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in
paragraph (a) or (b) of this Section 7 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Initial Purchasers on
the other hand from the offering of such Offered Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Initial Purchasers on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Initial
Purchasers on the other hand in connection with the offering of such Offered
Securities shall be deemed to be in the same respective proportions as the net
proceeds from the offering of such Offered Securities (before deducting
expenses) received by the Company and the total discounts and commissions
received by the Initial Purchasers in respect thereof, in each case as set forth
in the Memorandum, bear to the aggregate offering price of such Offered
Securities. The relative fault of the Company on the one hand and of the
Initial Purchasers on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Initial Purchasers and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(e) The Company and the Initial Purchasers agree that it would
not be just or equitable if contribution pursuant to this Section 7 were
determined by PRO RATA allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages and liabilities referred to in paragraph (d) above shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, the Initial Purchasers shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Offered Securities resold by it in the initial placement of such Offered
Securities were offered to investors exceeds the amount of any damages that the
Initial Purchasers has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The indemnity and contribution
provisions contained in this Section 7 and the representations and warranties of
the Company contained in this Agreement shall remain operative and in full force
and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of the Initial Purchasers or any person
controlling the Initial Purchasers or by or on behalf of the Company, its
officers or directors or any person
16
<PAGE>
controlling the Company and (iii) acceptance of and payment for any of the
Offered Securities. The remedies provided for in this Section 7 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
8. TERMINATION. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date or the Option Closing Date, as the
case may be, (i) trading generally shall have been suspended or materially
limited on or by, as the case may be, any of the New York Stock Exchange, the
American Stock Exchange, the National Association of Securities Dealers, Inc.,
the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any a securities of the Company shall
have been suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall have been
declared by either Federal or New York State authorities or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in your judgment, is material
and adverse and (b) in the case of any of the events specified in clauses
(a)(i) through (iv), such event singly or together with any other such event
makes it, in your judgment, impracticable to market the Offered Securities on
the terms and in the manner contemplated in the Memorandum.
9. MISCELLANEOUS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
If this Agreement shall be terminated by the Initial Purchasers
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Initial Purchasers for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by the Initial Purchasers in connection with this Agreement
or the offering contemplated hereunder.
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York.
The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Please confirm your agreement to the foregoing by signing in the space
provided below for that purpose and returning to us a copy hereof, whereupon
this Agreement shall constitute a binding agreement between us.
Very truly yours,
HEARTPORT, INC.
By: /s/ David B. Singer
--------------------------------
Name: David B. Singer
Title: Senior Vice President, Finance
and Chief Financial Officer
Agreed, April 15, 1997
MORGAN STANLEY & CO. INCORPORATED
GOLDMAN, SACHS & CO.
COWEN & COMPANY
By: /s/ Katina Dorton
--------------------------------
Katina Dorton, Vice President
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EXHIBIT A
OPINION OF
GUNDERSON DETTMER STOUGH
VILLENEUVE FRANKLIN & HACHIGIAN
The opinion of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, counsel for the Company, to be delivered pursuant to Section 4(c) of
the Placement Agreement shall be to the effect that:
1. The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has the
corporate power and authority to own its property and to conduct its business as
described in the Memorandum (references herein to the Memorandum being taken to
mean the same, as amended or supplemented as of the date hereof), and is duly
qualified to transact business and is in good standing in each jurisdiction in
which ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries, taken as a
whole;
2. The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Memorandum;
3. The shares of Common Stock outstanding prior to the issuance of
the Notes have been duly authorized, and are validly issued and non-assessable
and, to our knowledge, fully paid;
4. The Indenture has been duly authorized, executed and delivered by
the Company;
5. The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company;
6. The Offered Securities have been duly authorized;
7. The shares of Common Stock initially issuable on conversion of
the Offered Securities have been duly authorized and reserved for issuance upon
such conversion and, when issued and delivered upon conversion in accordance
with the terms of the Indenture, will have been validly issued, fully paid and
non-assessable, and the issuance thereof will not be subject to any preemptive
or, to our knowledge, similar rights;
8. The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement, the Indenture, the
Registration Rights Agreement and the Offered Securities will not contravene any
provision of applicable law or the certificate of incorporation or bylaws of the
Company or, to the best of our knowledge, any
1
<PAGE>
material agreement which was filed with the Company's annual report on Form 10-K
or which would be required to be filed with an annual report on Form 10-K if
such report was due as of the date of the Memorandum, or, to our knowledge, any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company, and no consent, approval, authorization or order
of or qualification with any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, the
Indenture and the Offered Securities except such as has been obtained or may be
required (x) by the securities or Blue Sky laws of the various states in
connection with the purchase and distribution of the Offered Securities by you,
and (y) in connection with the performance by the Company of its obligations
under the Registration Rights Agreement;
9. Such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or any
of its subsidiaries is subject and which, if adversely decided, would have a
material adverse effect on the Company and its subsidiaries, taken as a whole,
or prevent the Company from performing its obligations under this Agreement, the
Registration Rights Agreement, the Indenture or the Offered Securities or
consummating the transactions contemplated by such agreements, provided that
such counsel need not express any opinion as to the matters covered by the
opinion of Simpson, Thacher;
10. The Company is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended;
11. To the knowledge of such counsel, there is no legal or beneficial
owner of any securities of the Company who has any rights, not effectively
satisfied or waived, to require registration of any shares of capital stock of
the Company in connection with the filing of the registration statement on Form
S-3 pursuant to the terms of the Registration Rights Agreement;
12. The statements in the Memorandum under the captions "Description
of Notes," "Description of Capital Stock," "Business--Strategic Relationships,"
"Plan of Distribution" and "Transfer Restrictions," insofar as such statements
constitute a summary of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to such legal
matters, documents and proceedings and fairly summarize the matters referred to
therein;
13. The statements in the Memorandum under the caption "Certain
Federal Income Tax Considerations," insofar as such statements constitute a
summary of the United States federal income tax laws referred to therein, are
accurate and fairly summarize in all material respects the United States federal
tax laws referred to therein;
14. Each document incorporated by reference in the Memorandum (except
for financial statements and schedules and other financial data included therein
as to which such counsel need not express any opinion), complied as to form when
filed with the commission in all material respects with the Exchange Act and the
rules and regulations of the Commission thereunder and (ii) they confirm that
they have no reason to believe that (except for financial
2
<PAGE>
statements and schedules and other financial data therein, as to which they
express no belief) the Memorandum as of the date thereof contained any untrue
statement of material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that (except for financial statements and schedules and other financial data
therein, as to which they express no belief) the Memorandum as of the date
thereof and such date or dates as such opinion is delivered, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
15. Based upon the representations, warranties and agreements of the
Company, including those contained in Sections 1(q), l(t), l(x), l(y), 1(z),
5(f), 5(g), 5(h) and 5(j) of the Placement Agreement and of the Initial
Purchasers (as defined in the Memorandum) in Section 6 of the Placement
Agreement and on the representations and agreements contained in the section
"Transfer Restrictions" of the Memorandum, and assuming compliance therewith,
it is not necessary in connection with the offer, sale and delivery of the
Offered Securities to the Initial Purchasers under the Placement Agreement or
in connection with the initial resale of such Offered Securities by the Initial
Purchasers in accordance with Section 6 of the Placement Agreement to register
the Offered Securities or the Underlying Securities (other than as required by
the Registration Rights Agreement) under the Securities Act of 1933 or to
qualify the Indenture under the Trust Indenture Act of 1939, it being understood
that no opinion is expressed as to any subsequent resale of any Offered Security
or Underlying Securities.
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HEARTPORT, INC.
TO
THE BANK OF NEW YORK
Trustee
INDENTURE
Dated as of April 15, 1997
7 1/4% Convertible Subordinated Notes due 2004
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 1
Affiliate . . . . . . . . . . . . . . . . . . . . . . . 2
Applicable Price. . . . . . . . . . . . . . . . . . . . 2
Board of Directors. . . . . . . . . . . . . . . . . . . 2
Business Day. . . . . . . . . . . . . . . . . . . . . . 2
Closing Price . . . . . . . . . . . . . . . . . . . . . 2
Commission. . . . . . . . . . . . . . . . . . . . . . . 2
Common Stock. . . . . . . . . . . . . . . . . . . . . . 2
Company . . . . . . . . . . . . . . . . . . . . . . . . 3
Conversion Price. . . . . . . . . . . . . . . . . . . . 3
Corporate Trust Office. . . . . . . . . . . . . . . . . 3
Custodian . . . . . . . . . . . . . . . . . . . . . . . 3
Default . . . . . . . . . . . . . . . . . . . . . . . . 3
Depositary. . . . . . . . . . . . . . . . . . . . . . . 3
Designated Senior Indebtedness. . . . . . . . . . . . . 3
Exchange Act. . . . . . . . . . . . . . . . . . . . . . 3
Event of Default. . . . . . . . . . . . . . . . . . . . 4
Fundamental Change. . . . . . . . . . . . . . . . . . . 4
Indebtedness. . . . . . . . . . . . . . . . . . . . . . 4
Indenture . . . . . . . . . . . . . . . . . . . . . . . 5
Initial Purchasers. . . . . . . . . . . . . . . . . . . 5
Institutional Accredited Investor . . . . . . . . . . . 5
Liquidated Damages. . . . . . . . . . . . . . . . . . . 5
Loan Agreement. . . . . . . . . . . . . . . . . . . . . 5
Note or Notes . . . . . . . . . . . . . . . . . . . . . 5
Noteholder or Holder. . . . . . . . . . . . . . . . . . 5
Note Register . . . . . . . . . . . . . . . . . . . . . 5
Officers' Certificate . . . . . . . . . . . . . . . . . 5
Opinion of Counsel. . . . . . . . . . . . . . . . . . . 5
Outstanding . . . . . . . . . . . . . . . . . . . . . . 5
Payment Blockage Notice . . . . . . . . . . . . . . . . 6
Person. . . . . . . . . . . . . . . . . . . . . . . . . 6
PORTAL Market . . . . . . . . . . . . . . . . . . . . . 6
Predecessor Note. . . . . . . . . . . . . . . . . . . . 6
QIB . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Reference Market Price. . . . . . . . . . . . . . . . . 6
Registration Rights Agreement . . . . . . . . . . . . . 6
Regulation S. . . . . . . . . . . . . . . . . . . . . . 6
Representative. . . . . . . . . . . . . . . . . . . . . 7
Responsible Officer . . . . . . . . . . . . . . . . . . 7
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(CONTINUED)
PAGE
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Restricted Securities . . . . . . . . . . . . . . . . . 7
Rights. . . . . . . . . . . . . . . . . . . . . . . . . 7
Rights Agreement. . . . . . . . . . . . . . . . . . . . 7
Rule 144A . . . . . . . . . . . . . . . . . . . . . . . 7
Securities Act. . . . . . . . . . . . . . . . . . . . . 7
Senior Indebtedness . . . . . . . . . . . . . . . . . . 7
Subsidiary. . . . . . . . . . . . . . . . . . . . . . . 8
Trading Day . . . . . . . . . . . . . . . . . . . . . . 8
Trigger Event . . . . . . . . . . . . . . . . . . . . . 8
Trust Indenture Act . . . . . . . . . . . . . . . . . . 8
Trustee . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE II ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND
EXCHANGE OF NOTES . . . . . . . . . . . . . . . . . . . 8
Section 2.1 Designation Amount and Issue of Notes . . . . . . . . . 8
Section 2.2 Form of Notes . . . . . . . . . . . . . . . . . . . . . 9
Section 2.3 Date and Denomination of Notes; Payments of Interest. . 9
Section 2.4 Execution of Notes. . . . . . . . . . . . . . . . . . . 11
Section 2.5 Exchange and Registration of Transfer of Notes:
Restrictions on Transfer; Depositary. . . . . . . . . . 11
Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes. . . . . . . 19
Section 2.7 Temporary Notes . . . . . . . . . . . . . . . . . . . . 20
Section 2.8 Cancellation of Notes Paid, Etc.. . . . . . . . . . . . 21
Section 2.9 CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE III REDEMPTION OF NOTES . . . . . . . . . . . . . . . . . . 21
Section 3.1 Redemption Prices . . . . . . . . . . . . . . . . . . . 21
Section 3.2 Notice of Redemption; Selection of Notes. . . . . . . . 21
Section 3.3 Payment of Notes Called for Redemption. . . . . . . . . 23
Section 3.4 Conversion Arrangement on Call for Redemption . . . . . 24
Section 3.5 Redemption at Option of Holders . . . . . . . . . . . . 24
ARTICLE IV SUBORDINATION OF NOTES. . . . . . . . . . . . . . . . . 27
Section 4.1 Agreement of Subordination. . . . . . . . . . . . . . . 27
Section 4.2 Payments to Noteholders . . . . . . . . . . . . . . . . 27
Section 4.3 Subrogation of Notes. . . . . . . . . . . . . . . . . . 30
Section 4.4 Authorization to Effect Subordination . . . . . . . . . 31
Section 4.5 Notice to Trustee . . . . . . . . . . . . . . . . . . . 31
Section 4.6 Trustee's Relation to Senior Indebtedness . . . . . . . 32
Section 4.7 No Impairment of Subordination. . . . . . . . . . . . . 32
Section 4.8 Certain Conversions Deemed Payment. . . . . . . . . . . 32
Section 4.9 Article Applicable to Paying Agents . . . . . . . . . . 33
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Section 4.10 Senior Indebtedness Entitled to Rely. . . . . . . . . . 33
Section 4.11 Reliance on Judicial Order or Certificate of
Liquidating Agent . . . . . . . . . . . . . . . . . . . 33
ARTICLE V PARTICULAR COVENANTS OF THE COMPANY . . . . . . . . . . 33
Section 5.1 Payment of Principal, Premium and Interest. . . . . . . 33
Section 5.2 Maintenance of Office or Agency . . . . . . . . . . . . 34
Section 5.3 Appointments to Fill Vacancies in Trustee's Office. . . 34
Section 5.4 Provisions as to Paying Agent . . . . . . . . . . . . . 34
Section 5.5 Existence . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.6 Maintenance of Properties. . . . . . . . . . . . . . . 36
Section 5.7 Payment of Taxes and Other Claims. . . . . . . . . . . 36
Section 5.8 Rule 144A Information Requirement . . . . . . . . . . . 36
Section 5.9 Stay, Extension and Usury Laws. . . . . . . . . . . . . 36
Section 5.10 Compliance Certificate. . . . . . . . . . . . . . . . . 37
Section 5.11 Further Instruments and Acts. . . . . . . . . . . . . . 37
ARTICLE VI NOTEHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE. . . . . . . . . . . . . 37
Section 6.1 Noteholders' Lists. . . . . . . . . . . . . . . . . . . 37
Section 6.2 Preservation and Disclosure of Lists. . . . . . . . . . 38
Section 6.3 Reports by Trustee. . . . . . . . . . . . . . . . . . . 38
Section 6.4 Reports by Company. . . . . . . . . . . . . . . . . . . 38
ARTICLE VII REMEDIES OF THE TRUSTEE AND
NOTEHOLDERS ON AN EVENT OF DEFAULT. . . . . . . . . . . 39
Section 7.1 Events of Default . . . . . . . . . . . . . . . . . . . 39
Section 7.2 Payments of Notes on Default; Suit Therefor . . . . . . 40
Section 7.3 Application of Monies Collected by Trustee. . . . . . . 42
Section 7.4 Proceedings by Noteholder . . . . . . . . . . . . . . . 43
Section 7.5 Proceedings by Trustee. . . . . . . . . . . . . . . . . 43
Section 7.6 Remedies Cumulative and Continuing. . . . . . . . . . . 44
Section 7.7 Direction of Proceedings and Waiver of Defaults
by Majority of Noteholders. . . . . . . . . . . . . . . 44
Section 7.8 Notice of Defaults. . . . . . . . . . . . . . . . . . . 44
Section 7.9 Undertaking to Pay Costs. . . . . . . . . . . . . . . . 45
ARTICLE VIII CONCERNING THE TRUSTEE. . . . . . . . . . . . . . . . . 45
Section 8.1 Duties and Responsibilities of Trustee. . . . . . . . . 45
Section 8.2 Reliance on Documents, Opinions, Etc. . . . . . . . . . 47
Section 8.3 No Responsibility for Recitals, Etc.. . . . . . . . . . 48
Section 8.4 Trustee, Paying Agents, Conversion Agents
or Registrar May Own Notes. . . . . . . . . . . . . . . 48
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Section 8.5 Monies to Be Held in Trust. . . . . . . . . . . . . . . 48
Section 8.6 Compensation and Expenses of Trustee. . . . . . . . . . 48
Section 8.7 Officers' Certificate as Evidence . . . . . . . . . . . 49
Section 8.8 Conflicting Interests of Trustee. . . . . . . . . . . . 49
Section 8.9 Eligibility of Trustee. . . . . . . . . . . . . . . . . 49
Section 8.10 Resignation or Removal of Trustee . . . . . . . . . . . 49
Section 8.11 Acceptance by Successor Trustee . . . . . . . . . . . . 50
Section 8.12 Succession by Merger, Etc.. . . . . . . . . . . . . . . 51
Section 8.13 Preferential Collection of Claims.. . . . . . . . . . . 51
Section 8.14 Trustee's Application for Instructions
from the Company. . . . . . . . . . . . . . . . . . . . 52
ARTICLE IX CONCERNING THE NOTEHOLDERS. . . . . . . . . . . . . . . 52
Section 9.1 Action by Noteholders . . . . . . . . . . . . . . . . . 52
Section 9.2 Proof of Execution by Noteholders . . . . . . . . . . . 52
Section 9.3 Who Are Deemed Absolute Owners. . . . . . . . . . . . . 53
Section 9.4 Company-Owned Notes Disregarded . . . . . . . . . . . . 53
Section 9.5 Revocation of Consents; Future Holders Bound. . . . . . 53
ARTICLE X NOTEHOLDERS' MEETINGS . . . . . . . . . . . . . . . . . 54
Section 10.1 Purpose of Meetings . . . . . . . . . . . . . . . . . . 54
Section 10.2 Call of Meetings by Trustee . . . . . . . . . . . . . . 54
Section 10.3 Call of Meetings by Company or Noteholders. . . . . . . 54
Section 10.4 Qualifications for Voting . . . . . . . . . . . . . . . 55
Section 10.5 Relations . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.6 Voting. . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.7 No Delay of Rights by Meeting . . . . . . . . . . . . . 56
ARTICLE XI SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . 56
Section 11.1 Supplemental Indentures Without Consent of Noteholders. 56
Section 11.2 Supplemental Indentures with Consent of Noteholders . . 57
Section 11.3 Effect of Supplemental Indenture. . . . . . . . . . . . 58
Section 11.4 Notation on Notes . . . . . . . . . . . . . . . . . . . 58
Section 11.5 Evidence of Compliance of Supplemental Indenture
to Be Furnished Trustee . . . . . . . . . . . . . . . . 59
ARTICLE XII CONSOLIDATION, MERGER, SALE,
CONVEYANCE AND LEASE. . . . . . . . . . . . . . . . . . 59
Section 12.1 Company May Consolidate Etc. on Certain Terms . . . . . 59
Section 12.2 Successor Corporation to Be Substituted . . . . . . . . 59
Section 12.3 Opinion of Counsel to Be Given Trustee. . . . . . . . . 60
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ARTICLE XIII SATISFACTION AND DISCHARGE OF INDENTURE . . . . . . . . 60
Section 13.1 Discharge of Indenture. . . . . . . . . . . . . . . . . 60
Section 13.2 Deposited Monies to Be Held in Trust by Trustee . . . . 61
Section 13.3 Paying Agent to Repay Monies Held . . . . . . . . . . . 61
Section 13.4 Return of Unclaimed Monies. . . . . . . . . . . . . . . 61
Section 13.5 Reinstatement . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE XIV IMMUNITY OF INCORPORATORS,
STOCKHOLDERS, OFFICERS AND DIRECTORS. . . . . . . . . . 62
Section 14.1 Indenture and Notes Solely Corporate Obligations. . . . 62
ARTICLE XV CONVERSION OF NOTES . . . . . . . . . . . . . . . . . . 62
Section 15.1 Right to Convert. . . . . . . . . . . . . . . . . . . . 62
Section 15.2 Exercise of Conversion Privilege; Issuance
of Common Stock on Conversion;
No Adjustment for Interest or Dividends . . . . . . . . 62
Section 15.3 Cash Payments in Lieu of Fractional Shares. . . . . . . 64
Section 15.4 Conversion Price. . . . . . . . . . . . . . . . . . . . 64
Section 15.5 Adjustment of Conversion Price. . . . . . . . . . . . . 64
Section 15.6 Effect of Reclassification, Consolidation,
Merger or Sale. . . . . . . . . . . . . . . . . . . . . 74
Section 15.7 Taxes on Shares Issued. . . . . . . . . . . . . . . . . 74
Section 15.8 Reservation of Shares; Shares to Be Fully Paid;
Compliance with Governmental Requirements;
Listing of Common Stock . . . . . . . . . . . . . . . . 75
Section 15.9 Responsibility of Trustee . . . . . . . . . . . . . . . 75
Section 15.10 Notice to Holders Prior to Certain Actions. . . . . . . 76
ARTICLE XVI MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . 77
Section 16.1 Provisions Binding on Company's Successors. . . . . . . 77
Section 16.2 Official Acts by Successor Corporation. . . . . . . . . 77
Section 16.3 Addresses for Notices, Etc. . . . . . . . . . . . . . . 77
Section 16.4 Governing Law . . . . . . . . . . . . . . . . . . . . . 78
Section 16.5 Evidence of Compliance with Conditions Precedent;
Certificates to Trustee . . . . . . . . . . . . . . . . 78
Section 16.6 Legal Holidays. . . . . . . . . . . . . . . . . . . . . 78
Section 16.7 Trust Indenture Act . . . . . . . . . . . . . . . . . . 78
Section 16.8 No Security Interest Created. . . . . . . . . . . . . . 78
Section 16.9 Benefits of Indenture . . . . . . . . . . . . . . . . . 79
Section 16.10 Table of Contents, Headings, Etc. . . . . . . . . . . . 79
Section 16.11 Authenticating Agent. . . . . . . . . . . . . . . . . . 79
Section 16.12 Execution in Counterparts . . . . . . . . . . . . . . . 80
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<PAGE>
INDENTURE dated as of April 15, 1997, between Heartport, Inc., a
Delaware corporation (hereinafter sometimes called the "Company", as more fully
set forth in Section 1.1), and The Bank of New York, a New York banking
corporation, as trustee hereunder (hereinafter sometimes called the "Trustee",
as more fully set forth in Section 1.1).
W I T N E S S E T H:
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue of its 7 1/4% Convertible Subordinated Notes due 2004
(hereinafter sometimes called the "Notes"), in an aggregate principal amount not
to exceed $86,250,000 and, to provide the terms and conditions upon which the
Notes are to be authenticated, issued and delivered, the Company has duly
authorized the execution and delivery of this Indenture; and
WHEREAS, the Notes, the certificate of authentication to be borne by
the Notes, a form of assignment, a form of option to elect repayment upon a
Fundamental Change, and a form of conversion notice to be borne by the Notes are
to be substantially in the forms hereinafter provided for; and
WHEREAS, all acts and things necessary to make the Notes, when
executed by the Company and authenticated and delivered by the Trustee or a duly
authorized authenticating agent, as in this Indenture provided, the valid,
binding and legal obligations of the Company, and to constitute these presents a
valid agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes
are, and are to be, authenticated, issued and delivered, and in consideration of
the premises and of the purchase and acceptance of the Notes by the holders
thereof, the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below), as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. The terms defined in this Section 1.1
(except as herein otherwise expressly provided or unless the context otherwise
requires) for all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Section 1.1. All
other terms used in this Indenture that are defined in the Trust Indenture Act
or which are by reference therein defined in the Securities Act (except as
herein otherwise expressly provided or unless the context otherwise requires)
shall have the meanings assigned to such terms in said Trust Indenture Act and
in said Securities Act as in force at the date of the execution of this
Indenture. The words "herein," "hereof," "hereunder," and words of
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similar import refer to this Indenture as a whole and not to any particular
Article, Section or other Subdivision. The terms defined in this Article
include the plural as well as the singular.
AFFILIATE: The term "Affiliate" of any specified Person shall mean
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person. For the purposes
of this definition, "control," when used with respect to any specified Person
means the power to direct or cause the direction of the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
APPLICABLE PRICE: The term "Applicable Price" shall mean (i) in the
event of a Fundamental Change in which the holders of the Common Stock receive
only cash, the amount of cash received by the holder of one share of Common
Stock and (ii) in the event of any other Fundamental Change, the arithmetic
average of the Closing Price for the Common Stock (determined as set forth in
Section 15.5(i)) during the ten Trading Days (as defined in Section 15.5(i))
prior to the record date for the determination of the holders of Common Stock
entitled to receive cash, securities, property or other assets in connection
with such Fundamental Change, or, if there is no such record date, the date upon
which the holders of the Common Stock shall have the right to receive such cash,
securities, property or other assets in connection with the Fundamental Change.
BOARD OF DIRECTORS: The term "Board of Directors" shall mean the
Board of Directors of the Company or a committee of such Board duly authorized
to act for it hereunder.
BUSINESS DAY: The term "Business Day" means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which the banking
institutions in The City of New York or the city in which the Corporate Trust
Office is located are authorized or obligated by law or executive order to close
or be closed.
CLOSING PRICE: The term "Closing Price" shall have the meaning
specified in Section 15.5(i)(1).
COMMISSION: The term "Commission" shall mean the Securities and
Exchange Commission.
COMMON STOCK: The term "Common Stock" shall mean any stock of any
class of the Company which has no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which is not subject to redemption
by the Company. Subject to the provisions of Section 15.6, however, shares
issuable on conversion of Notes shall include only shares of the class
designated as common stock of the Company at the date of this Indenture or
shares of any class or classes resulting from any reclassification or
reclassifications thereof and which have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which are not subject to redemption
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<PAGE>
by the Company; PROVIDED that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares of
all such classes resulting from all such reclassifications.
COMPANY: The term "Company" shall mean Heartport, Inc., a Delaware
corporation, and subject to the provisions of Article XII, shall include its
successors and assigns.
CONVERSION PRICE: The term "Conversion Price" shall have the meaning
specified in Section 15.4.
CORPORATE TRUST OFFICE: The term "Corporate Trust Office" or other
similar term, shall mean the principal office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office is, at the date as of which this Indenture is dated, located at 101
Barclay St., Floor 21 West, New York, New York 10286 Attention: Corporate
Trust Administration.
CUSTODIAN: The term "Custodian" shall mean The Bank of New York, as
custodian with respect to the Notes in global form, or any successor entity
thereto.
DEFAULT: The term "default" shall mean any event that is, or after
notice or passage of time, or both, would be, an Event of Default.
DEPOSITARY: The term "Depositary" means, with respect to the Notes
issuable or issued in whole or in part in global form, the person specified in
Section 2.5(d) as the Depositary with respect to such Notes, until a successor
shall have been appointed and become such pursuant to the applicable provisions
of this Indenture, and thereafter, "Depositary" shall mean or include such
successor.
DESIGNATED SENIOR INDEBTEDNESS: The term "Designated Senior
Indebtedness" means the Loan Agreement and any particular Senior Indebtedness in
which the instrument creating or evidencing the same or the assumption or
guarantee thereof (or related agreements or documents to which the Company is a
party) expressly provides that such Senior Indebtedness shall be "Designated
Senior Indebtedness" for purposes of the Indenture (provided that such
instrument, agreement or other document may place limitations and conditions on
the right of such Senior Indebtedness to exercise the rights of Designated
Senior Indebtedness). If any payment made to any holder of any Designated
Senior Indebtedness or its Representative with respect to such Designated Senior
Indebtedness is rescinded or must otherwise be returned by such holder or
Representative upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, the reinstated Indebtedness of the Company arising as a result of
such rescission or return shall constitute Designated Senior Indebtedness
effective as of the date of such rescission or return.
EXCHANGE ACT: The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder, as in effect from time to time.
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EVENT OF DEFAULT: The term "Event of Default" shall mean any event
specified in Section 7.1(a), (b), (c), (d) or (e).
FUNDAMENTAL CHANGE: The term "Fundamental Change" means the
occurrence of any transaction or event in connection with which all or
substantially all the Common Stock shall be exchanged for, converted into,
acquired for or constitute the right to receive consideration (whether by means
of an exchange offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization or otherwise) which is not all
or substantially all common stock which is (or, upon consummation of or
immediately following such transaction or event, will be) listed on a United
States national securities exchange or approved for quotation on the Nasdaq
National Market or any similar United States system of automated dissemination
of quotations of securities prices.
INDEBTEDNESS: The term "Indebtedness" means, with respect to any
Person, and without duplication, (a) all indebtedness, obligations and other
liabilities (contingent or otherwise) of such Person for borrowed money
(including obligations of the Company in respect of overdrafts, foreign exchange
contracts, currency exchange agreements, interest rate protection agreements,
and any loans or advances from banks, whether or not evidenced by notes or
similar instruments) or evidenced by bonds, debentures, notes or similar
instruments (whether or not the recourse of the lender is to the whole of the
assets of such Person or to only a portion thereof) (other than any account
payable or other accrued current liability or obligation incurred in the
ordinary course of business in connection with the obtaining of materials or
services), (b) all reimbursement obligations and other liabilities (contingent
or otherwise) of such Person with respect to letters of credit, bank guarantees
or bankers' acceptances, (c) all obligations and liabilities (contingent or
otherwise) in respect of leases of such Person required, in conformity with
generally accepted accounting principles, to be accounted for as capitalized
lease obligations on the balance sheet of such Person and all obligations and
other liabilities (contingent or otherwise) under any lease or related document
(including a purchase agreement) in connection with the lease of real property
which provides that such Person is contractually obligated to purchase or cause
a third party to purchase the leased property and thereby guarantee a minimum
residual value of the leased property to the lessor and the obligations of such
Person under such lease or related document to purchase or to cause a third
party to purchase such leased property, (d) all obligations of such Person
(contingent or otherwise) with respect to an interest rate or other swap, cap or
collar agreement or other similar instrument or agreement or foreign currency
hedge, exchange, purchase or similar instrument or agreement, (e) all direct or
indirect guaranties or similar agreements by such Person in respect of, and
obligations or liabilities (contingent or otherwise) of such Person to purchase
or otherwise acquire or otherwise assure a creditor against loss in respect of
indebtedness, obligations or liabilities of another Person of the kind described
in clauses (a) through (d), (f) any indebtedness or other obligations described
in clauses (a) through (d) secured by any mortgage, pledge, lien or other
encumbrance existing on property which is owned or held by such Person,
regardless of whether the indebtedness or other obligation secured thereby shall
have been assumed by such Person and (g) any and all deferrals, renewals,
extensions and refundings of, or amendments, modifications or supplements to,
any indebtedness, obligation or liability of the kind described in clauses (a)
through (f).
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INDENTURE: The term "Indenture" shall mean this instrument as
originally executed or, if amended or supplemented as herein provided, as so
amended or supplemented.
INITIAL PURCHASERS: The term "Initial Purchasers" means Morgan
Stanley & Co. Incorporated, Goldman, Sachs & Co. and Cowen & Company.
INSTITUTIONAL ACCREDITED INVESTOR: The term "Institutional Accredited
Investor" shall mean an institutional "accredited investor" within the meaning
of Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
LIQUIDATED DAMAGES: The term "Liquidated Damages" shall have the
meaning specified in the Registration Rights Agreement.
LOAN AGREEMENT: The term "Loan Agreement" means that certain Loan and
Security Agreement, dated as of December 31, 1996, by and between the Company
and Silicon Valley Bank, as amended, amended and restated, supplemented or
otherwise modified from time to time.
NOTE OR NOTES: The terms "Note" or "Notes" shall mean any Note or
Notes, as the case may be, authenticated and delivered under this Indenture,
including the 144A Global Note and the Regulation S Global Note.
NOTEHOLDER OR HOLDER: The terms "Noteholder" or "holder" as applied
to any Note, or other similar terms (but excluding the term "beneficial
holder"), shall mean any person in whose name at the time a particular Note is
registered on the Note registrar's books.
NOTE REGISTER: The term "Note register" shall have the meaning
specified in Section 2.5.
OFFICERS' CERTIFICATE: The term "Officers' Certificate," when used
with respect to the Company, shall mean a certificate signed by both (a) the
President, the Chief Executive Officer, Executive or Senior Vice President or
any Vice President (whether or not designated by a number or numbers or word or
words added before or after the title "Vice President") and (b) by the Treasurer
or any Assistant Treasurer or Secretary or any Assistant Secretary of the
Company.
OPINION OF COUNSEL: The term "Opinion of Counsel" shall mean an
opinion in writing signed by legal counsel, who may be an employee of or counsel
to the Company, or other counsel acceptable to the Trustee.
OUTSTANDING: The term "outstanding," when used with reference to
Notes, shall, subject to the provisions of Section 9.4, mean, as of any
particular time, all Notes authenticated and delivered by the Trustee under this
Indenture, except
(a) Notes theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
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(b) Notes, or portions thereof, (i) for the redemption of which
monies in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or (ii) which shall
have been otherwise defeased in accordance with Article XIII;
(c) Notes in lieu of which, or in substitution for which, other
Notes shall have been authenticated and delivered pursuant to the terms of
Section 2.6; and
(d) Notes converted into Common Stock pursuant to Article XV and
Notes deemed not outstanding pursuant to Article III.
PAYMENT BLOCKAGE NOTICE: The term "Payment Blockage Notice" has the
meaning specified in Section 4.2.
PERSON: The term "Person" shall mean a corporation, an association, a
partnership, a limited liability corporation, an individual, a joint venture, a
joint stock company, a trust, an unincorporated organization or a government or
an agency or a political subdivision thereof.
PORTAL MARKET: The term "PORTAL Market" shall mean the PORTAL Market
operated by the National Association of Securities Dealers, Inc. or any
successor thereto.
PREDECESSOR NOTE: The term "Predecessor Note" of any particular Note
shall mean every previous Note evidencing all or a portion of the same debt as
that evidenced by such particular Note; and, for the purposes of this
definition, any Note authenticated and delivered under Section 2.6 in lieu of a
lost, destroyed or stolen Note shall be deemed to evidence the same debt as the
lost, destroyed or stolen Note that it replaces.
QIB: The term "QIB" shall mean a "qualified institutional buyer" as
defined in Rule 144A.
REFERENCE MARKET PRICE: The term "Reference Market Price" shall
initially mean $16.50 and in the event of any adjustment to the Conversion Price
pursuant to Sections 15.5(a), (b), (c), (d), (e), (f), (g) or (h) the Reference
Market Price shall also be adjusted so that the ratio of the Reference Market
Price to the Conversion Price after giving effect to any such adjustment shall
always be the same as the ratio of $16.50 to the initial Conversion Price
specified in the form of Note attached hereto (without regard to any adjustment
thereto).
REGISTRATION RIGHTS AGREEMENT: The term "Registration Rights
Agreement" means that certain Registration Rights Agreement, dated as of April
15, 1997, between the Company and the Initial Purchasers.
REGULATION S: The term "Regulation S" shall mean Regulation S as
promulgated under the Securities Act.
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REPRESENTATIVE: The term "Representative" means the (a) indenture
trustee or other trustee, agent or representative for any Senior Indebtedness or
(b) with respect to any Senior Indebtedness that does not have any such trustee,
agent or other representative, (i) in the case of such Senior Indebtedness
issued pursuant to an agreement providing for voting arrangements as among the
holders or owners of such Senior Indebtedness, any holder or owner of such
Senior Indebtedness acting with the consent of the required persons necessary to
bind such holders or owners of such Senior Indebtedness and (ii) in the case of
all other such Senior Indebtedness, the holder or owner of such Senior
Indebtedness.
RESPONSIBLE OFFICER: The term "Responsible Officer," when used with
respect to the Trustee, shall mean an officer of the Trustee in the Corporate
Trust Office assigned and duly authorized by the Trustee to administer its
corporate trust matters.
RESTRICTED SECURITIES: The term "Restricted Securities" has the
meaning specified in Section 2.5.
RIGHTS: The term "Rights" shall mean "Rights" as such term is defined
in the Rights Agreement.
RIGHTS AGREEMENT: The term "Rights Agreement" means that certain
Rights Agreement, dated as of April 25, 1996 between the Company and The First
National Bank of Boston, as Rights Agent, as amended from time to time.
RULE 144A: The term "Rule 144A" shall mean Rule 144A as promulgated
under the Securities Act.
SECURITIES ACT: The term "Securities Act" shall mean the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.
SENIOR INDEBTEDNESS: The term "Senior Indebtedness" means the
principal of, premium, if any, interest (including all interest accruing
subsequent to the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowable as a claim in any such
proceeding) and rent payable on or in connection with, and all fees, costs,
expenses and other amounts accrued or due on or in connection with, Indebtedness
of the Company, whether outstanding on the date of this Indenture or thereafter
created, incurred, assumed, guaranteed or in effect guaranteed by the Company
(including all deferrals, renewals, extensions or refundings of, or amendments,
modifications or supplements to, the foregoing), unless in the case of any
particular Indebtedness the instrument creating or evidencing the same or the
assumption or guarantee thereof expressly provides that such Indebtedness shall
not be senior in right of payment to the Notes or expressly provides that such
Indebtedness is "pari passu" or " junior" to the Notes. Notwithstanding the
foregoing, the term Senior Indebtedness shall not include any Indebtedness of
the Company to any subsidiary of the Company, a majority of the voting stock of
which is owned, directly or indirectly, by the Company. If any payment made to
any holder of any Senior Indebtedness or its Representative with respect to such
Senior Indebtedness is rescinded or must otherwise be returned by such holder or
Representative upon
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the insolvency, bankruptcy or reorganization of the Company or otherwise, the
reinstated Indebtedness of the Company arising as a result of such rescission or
return shall constitute Senior Indebtedness effective as of the date of such
rescission or return.
SUBSIDIARY: The term "Subsidiary" means, with respect to any person,
(i) any corporation, association or other business entity of which more than 50%
of the total voting power of shares of capital stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by such person or one or more of the other subsidiaries of that
person (or a combination thereof) and (ii) any partnership (a) the sole general
partner or managing general partner of which is such person or a subsidiary of
such person or (b) the only general partners of which are such person or of one
or more subsidiaries of such person (or any combination thereof).
TRADING DAY: The term "Trading Day" shall have the meaning specified
in Section 15.5(i)(5).
TRIGGER EVENT: The term "Trigger Event" shall have the meaning
specified in Section 15.5(d).
TRUST INDENTURE ACT: The term "Trust Indenture Act" shall mean the
Trust Indenture Act of 1939, as amended, as it was in force at the date of
execution of this Indenture, except as provided in Sections 11.3 and 15.6;
PROVIDED, HOWEVER, that in the event the Trust Indenture Act of 1939 is amended
after the date hereof, the term "Trust Indenture Act" shall mean, to the extent
required by such amendment, the Trust Indenture Act of 1939 as so amended.
TRUSTEE: The term "Trustee" shall mean The Bank of New York and its
successors and any corporation resulting from or surviving any consolidation or
merger to which it or its successors may be a party and any successor trustee at
the time serving as successor trustee hereunder.
The definitions of certain other terms are as specified in Sections
2.5 and 3.5 and Article XV.
ARTICLE II
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF NOTES
Section 2.1 DESIGNATION AMOUNT AND ISSUE OF NOTES. The Notes shall
be designated as "7 1/4% Convertible Subordinated Notes due 2004." Notes not to
exceed the aggregate principal amount of $75,000,000 (or $86,250,000 if the
over-allotment option set forth in Section 7 of the Placement Agreement dated
April 15, 1997 (as amended from time to time by the parties thereto) by and
between the Company and the Initial Purchasers is exercised in full) (except
pursuant to Sections 2.5, 2.6, 3.3, 3.5 and 15.2 hereof) upon the execution of
this
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Indenture, or from time to time thereafter, may be executed by the Company and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Notes to or upon the written order of the Company,
signed by its (a) Chief Executive Officer, President, Executive or Senior Vice
President or any Vice President (whether or not designated by a number or
numbers or word or words added before or after the title "Vice President") and
(b) Treasurer or Assistant Treasurer or its Secretary or any Assistant
Secretary, without any further action by the Company hereunder.
Section 2.2 FORM OF NOTES. The Notes and the Trustee's certificate
of authentication to be borne by such Notes shall be substantially in the form
set forth in Exhibit A, which is incorporated in and made a part of this
Indenture.
Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends and endorsements as the officers
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
securities exchange or automated quotation system on which the Notes may be
listed, or to conform to usage.
Any Note in global form shall represent such of the outstanding Notes
as shall be specified therein and shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be increased or reduced to reflect transfers or exchanges permitted
hereby. Any endorsement of a Note in global form to reflect the amount of any
increase or decrease in the amount of outstanding Notes represented thereby
shall be made by the Trustee or the Custodian, at the direction of the Trustee,
in such manner and upon instructions given by the holder of such Notes in
accordance with this Indenture. Payment of principal of and interest and
premium, if any, on any Note in global form shall be made to the holder of such
Note.
The terms and provisions contained in the form of Note attached as
Exhibit A hereto shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Section 2.3 DATE AND DENOMINATION OF NOTES; PAYMENTS OF INTEREST.
The Notes shall be issuable in registered form without coupons in denominations
of $1,000 principal amount and integral multiples thereof. Every Note shall be
dated the date of its authentication and shall bear interest from the applicable
date in each case as specified on the face of the form of Note attached as
Exhibit A hereto. Interest on the Notes shall be computed on the basis of a
360-day year comprised of twelve 30-day months.
The person in whose name any Note (or its Predecessor Note) is
registered on the Note register at the close of business on any record date with
respect to any interest payment date shall be entitled to receive the interest
payable on such interest payment date, except (i) that the
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interest payable upon redemption (unless the date of redemption is an interest
payment date) will be payable to the person to whom principal is payable and
(ii) as set forth in the next succeeding sentence. In the case of any Note (or
portion thereof) which is converted into Common Stock of the Company during the
period from (but excluding) a record date to (but excluding) the next succeeding
interest payment date either (i) if such Note (or portion thereof) has been
called for redemption on a redemption date which occurs during such period, or
is to be redeemed in connection with a Fundamental Change on a Repurchase Date
(as defined in Section 3.5) which occurs during such period, the Company shall
not be required to pay interest on such interest payment date in respect of any
such Note (or portion thereof) except to the extent required to be paid upon
redemption of such Note or portion thereof pursuant to Section 3.3 or 3.5 hereof
or (ii) if otherwise, any Note (or portion thereof) submitted for conversion
during such period shall be accompanied by funds equal to the interest payable
on such succeeding interest payment date on the principal amount so converted.
Interest may, as the Company shall specify to the paying agent in writing by
each record date, be paid either (i) by check mailed to the address of the
person entitled thereto as it appears in the Note register (provided that the
holder of Notes with an aggregate principal amount in excess of $2,000,000
shall, at the written election of such holder, be paid by wire transfer in
immediately available funds) or (ii) by transfer to an account maintained by
such person located in the United States; provided, however, that payments to
the Depositary will be made by wire transfer of immediately available funds to
the account of the Depositary or its nominee. The term "record date" with
respect to any interest payment date shall mean the April 15 or October 15
preceding said May 1 or November 1, respectively.
Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any said May 1 or November 1 (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Noteholder on the relevant
record date by virtue of his having been such Noteholder; and such Defaulted
Interest shall be paid by the Company, at its election in each case, as provided
in clause (1) or (2) below;
(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Notes (or their respective
Predecessor Notes) are registered at the close of business on a special record
date for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the amount
of Defaulted Interest to be paid on each Note and the date of the payment (which
shall be not less than twenty-five (25) days after the receipt by the Trustee of
such notice, unless the Trustee shall consent to an earlier date), and at the
same time the Company shall deposit with the Trustee an amount of money equal to
the aggregate amount to be paid in respect of such Defaulted Interest or shall
make arrangements satisfactory to the Trustee for such deposit prior to the date
of the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a special record date for the payment
of such Defaulted Interest which shall be not more than fifteen (15) days and
not less than ten (10) days prior to the date of the proposed payment and not
less than ten (10) days after the receipt by the Trustee of the notice of the
proposed payment the Trustee shall promptly notify the Company of such special
record date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the special record
date therefor to be
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mailed, first-class postage prepaid, to each Noteholder at his address as it
appears in the Note register, not less than ten (10) days prior to such special
record date. Notice of the proposed payment of such Defaulted Interest and the
special record date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Notes (or their respective
Predecessor Notes) were registered at the close of business on such special
record date and shall no longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the requirements of
any securities exchange or automated quotation system on which the Notes may be
listed or designated for issuance, and upon such notice as may be required by
such exchange or automated quotation system, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee.
Section 2.4 EXECUTION OF NOTES. The Notes shall be signed in the
name and on behalf of the Company by the facsimile signature of its Chief
Executive Officer, President, any Executive or Senior Vice President or any Vice
President (whether or not designated by a number or numbers or word or words
added before or after the title "Vice President") and attested by the facsimile
signature of its Secretary or any of its Assistant Secretaries or Treasurer or
any of its Assistant Treasurers (which may be printed, engraved or otherwise
reproduced thereon, by facsimile or otherwise). Only such Notes as shall bear
thereon a certificate of authentication substantially in the form set forth on
the form of Note attached as Exhibit A hereto, manually executed by the Trustee
(or an authenticating agent appointed by the Trustee as provided by Section
16.11), shall be entitled to the benefits of this Indenture or be valid or
obligatory for any purpose. Such certificate by the Trustee (or such an
authenticating agent) upon any Note executed by the Company shall be conclusive
evidence that the Note so authenticated has been duly authenticated and
delivered hereunder and that the holder is entitled to the benefits of this
Indenture.
In case any officer of the Company who shall have signed any of the
Notes shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company; and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.
Section 2.5 EXCHANGE AND REGISTRATION OF TRANSFER OF NOTES:
RESTRICTIONS ON TRANSFER; DEPOSITARY.
(a) The Company shall cause to be kept at the
Corporate Trust Office a register (the register maintained in such office and in
any other office or agency of the Company designated pursuant to Section 5.2
being herein sometimes collectively referred to as the "Note register") in
which, subject to such reasonable regulations as it may prescribe, the
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Company shall provide for the registration of Notes and of transfers of Notes.
The Note register shall be in written form or in any form capable of being
converted into written form within a reasonably prompt period of time. The
Trustee is hereby appointed "Note registrar" for the purpose of registering
Notes and transfers of Notes as herein provided. The Company may appoint one or
more co-registrars in accordance with Section 5.2.
Upon surrender for registration of transfer of any Note to the Note
registrar or any co-registrar, and satisfaction of the requirements for such
transfer set forth in this Section 2.5, the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Notes of any authorized denominations and of a
like aggregate principal amount and bearing such restrictive legends as may be
required by this Indenture.
Notes may be exchanged for other Notes of any authorized denominations
and of a like aggregate principal amount, upon surrender of the Notes to be
exchanged at any such office or agency maintained by the Company pursuant to
Section 5.2. Whenever any Notes are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Notes which
the Noteholder making the exchange is entitled to receive bearing registration
numbers not contemporaneously outstanding.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
All Notes presented or surrendered for registration of transfer or for
exchange, redemption or conversion shall (if so required by the Company or the
Note registrar) be duly endorsed, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company, and the Notes shall
be duly executed by the Noteholder thereof or his attorney duly authorized in
writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax, assessment or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes.
Neither the Company nor the Trustee nor any Note registrar or any
Company registrar shall be required to exchange or register a transfer of (a)
any Notes for a period of fifteen (15) days next preceding any selection of
Notes to be redeemed or (b) any Notes or portions thereof called for redemption
pursuant to Article 3.2 or (c) any Notes or portion thereof surrendered for
conversion pursuant to Article XV.
(b) So long as the Notes are eligible for book-entry
settlement with the Depositary, or unless otherwise required by law, all Notes
that are so eligible may be represented by one or more Notes in global form
registered in the name of the Depositary or the nominee of the Depositary,
except as otherwise specified below. The transfer and exchange of
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beneficial interests in any such Note in global form shall be effected through
the Depositary in accordance with this Indenture and the procedures of the
Depositary therefor.
Notes that upon initial issuance are beneficially owned by QIBs will
be represented by a global Note (the "144A Global Note"), and Notes that upon
initial issuance are beneficially owned by Non-U.S. Persons will be represented
by another global Note (the "Regulation S Global Note"). Transfers of interests
in the Notes between the 144A Global Note and the Regulation S Global Note will
be made in accordance with the standing instructions and procedures of the
Depositary and its participants. The Trustee shall make appropriate
endorsements to reflect increases or decreases in the principal amounts of such
global Notes as set forth on the face of the Note ("Principal Amount") to
reflect any such transfers.
Except as provided below, beneficial owners of a Note in global form
shall not be entitled to have certificates registered in their names, will not
receive or be entitled to receive physical delivery of certificates in
definitive form and will not be considered Holders of such Notes in global form.
(c) So long as the Notes are eligible for book-entry
settlement, or unless otherwise required by law, upon any transfer of a
definitive Note to a QIB in accordance with Rule 144A or to a Non-U.S. Person in
accordance with Regulation S, and upon receipt of the definitive Note or Notes
being so transferred, together with a certification, substantially in the form
on the reverse of the Note, from the transferor that the transfer is being made
in compliance with Rule 144A or Regulation S, as the case may be (or other
evidence satisfactory to the Trustee), the Trustee shall make an endorsement on
the 144A Global Note or the Regulation S Global Note, as the case may be, to
reflect an increase in the aggregate Principal Amount of the Notes represented
by such Note in global form, the Trustee shall cancel such definitive Note or
Notes in accordance with the standing instructions and procedures of the
Depositary, the aggregate Principal Amount of Notes represented by such Note in
global form to be increased accordingly; PROVIDED that no definitive Note, or
portion thereof, in respect of which the Company or an Affiliate of the Company
held any beneficial interest shall be included in such Note in global form until
such definitive Note is freely tradable in accordance with Rule 144(k); PROVIDED
FURTHER that the Trustee shall issue Notes in definitive form upon any transfer
of a beneficial interest in the Note in global form to the Company or any
Affiliate of the Company.
Upon any sale or transfer of a Note to an Institutional Accredited
Investor (other than pursuant to a registration statement that has been declared
effective under the Securities Act), such Institutional Accredited Investor
shall, prior to such sale or transfer, furnish to the Company and/or the Trustee
a signed letter containing representations and agreements relating to
restrictions on transfer substantially in the form set forth in Exhibit B to
this Indenture.
Any Note in global form may be endorsed with or have incorporated in
the text thereof such legends or recitals or changes not inconsistent with the
provisions of this Indenture as may be required by the Custodian, the Depositary
or by the National Association of Securities Dealers, Inc. in order for the
Notes to be tradeable on the PORTAL Market or as may be required for the Notes
to be tradeable on any other market developed for trading of securities pursuant
to
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Rule 144A or Regulation S or required to comply with any applicable law or any
regulation thereunder or with the rules and regulations of any securities
exchange or automated quotation system upon which the Notes may be listed or
traded or to conform with any usage with respect thereto, or to indicate any
special limitations or restrictions to which any particular Notes are subject.
(d) Every Note that bears or is required under this
Section 2.5(d) to bear the legend set forth in this Section 2.5(d) (together
with any Common Stock issued upon conversion of the Notes and required to bear
the legend set forth in Section 2.5(e), collectively, the "Restricted
Securities") shall be subject to the restrictions on transfer set forth in this
Section 2.5 (d) (including those set forth in the legend set forth below) unless
such restrictions on transfer shall be waived by written consent of the Company,
and the holder of each such Restricted Note, by such Noteholder's acceptance
thereof, agrees to be bound by all such restrictions on transfer. As used in
Sections 2.5(d) and 2.5(e), the term "transfer" encompasses any sale, pledge,
transfer or other disposition whatsoever of any Restricted Security.
Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
certificate evidencing such Note (and all securities issued in exchange therefor
or substitution thereof, other than Common Stock, if any, issued upon conversion
thereof, which shall bear the legend set forth in Section 2.5(e), if applicable)
shall bear a legend in substantially the following form, unless such Note has
been sold pursuant to a registration statement that has been declared effective
under the Securities Act (and which continues to be effective at the time of
such transfer), or unless otherwise agreed by the Company in writing, with
written notice thereof to the Trustee:
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THE NOTE EVIDENCED HEREBY IN AN OFFSHORE
TRANSACTION; (2) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE
HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY
UNDER RULE 144(K) UNDER THE SECURITIES ACT
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(OR ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE TRANSFER THE NOTE
EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH
NOTE EXCEPT (A) TO HEARTPORT, INC. OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO THE BANK OF NEW YORK, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM SUCH TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D)
OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE
TIME OF SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A
TRANSFER PURSUANT TO CLAUSE 1(F) ABOVE), IT WILL FURNISH TO THE BANK
OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (4) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE NOTE
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET
FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER
AND SUBMIT THIS CERTIFICATE TO THE
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BANK OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE).
IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR
A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE BANK OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER
IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS
LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE NOTE
EVIDENCED HEREBY PURSUANT TO CLAUSE 1(F) ABOVE OR UPON ANY TRANSFER OF
THE NOTE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT
(OR ANY SUCCESSOR PROVISION), AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Any Note (or security issued in exchange or substitution therefor) as
to which such restrictions on transfer shall have expired in accordance with
their terms or as to the conditions for removal of the foregoing legend set
forth therein have been satisfied may, upon surrender of such Note for exchange
to the Note registrar in accordance with the provisions of this Section 2.5, be
exchanged for a new Note or Notes, of like tenor and aggregate principal amount,
which shall not bear the restrictive legend required by this Section 2.5(d).
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in the second paragraph of Section 2.5(b) and in this
Section 2.5(d)), a Note in global form may not be transferred as a whole or in
part except by the Depositary to a nominee of the Depositary or by a nominee of
the Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary.
The Depositary shall be a clearing agency registered under the
Exchange Act. The Company initially appoints The Depository Trust Company to
act as Depositary with respect to the Notes in global form. Initially, the 144A
Global Note and the Regulation S Global Note shall be issued to the Depositary,
registered in the name of Cede & Co., as the nominee of the Depositary, and
deposited with the Custodian for Cede & Co.
If at any time the Depositary for a Note in global form notifies the
Company that it is unwilling or unable to continue as Depositary for such Note,
the Company may appoint a
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successor Depositary with respect to such Note. If a successor Depositary is
not appointed by the Company within ninety (90) days after the Company receives
such notice, the Company will execute, and the Trustee, upon receipt of an
Officers' Certificate for the authentication and delivery of Notes, will
authenticate and deliver, Notes in certificated form, in aggregate principal
amount equal to the principal amount of such Note in global form, in exchange
for such Note in global form.
If a Note in certificated form is issued in exchange for any portion
of a Note in global form after the close of business at the office or agency
where such exchange occurs on any record date and before the opening of business
at such office or agency on the next succeeding interest payment date, interest
will not be payable on such interest payment date in respect of such Note, but
will be payable on such interest payment date, subject to the provisions of
Section 2.3, only to the person to whom interest in respect of such portion of
such Note in global form is payable in accordance with the provisions of this
Indenture.
Notes in certificated form issued in exchange for all or a part of a
Note in global form pursuant to this Section 2.5 shall be registered in such
names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. Upon execution and authentication, the Trustee shall
deliver such Notes in certificated form to the persons in whose names such Notes
in certificated form are so registered.
At such time as all interests in a Note in global form have been
redeemed, converted, canceled, exchanged for Notes in certificated form, or
transferred to a transferee who receives Notes in certificated form thereof,
such Note in global form shall, upon receipt thereof, be canceled by the Trustee
in accordance with standing procedures and instructions existing between the
Depositary and the Custodian. At any time prior to such cancellation, if any
interest in a global Note is exchanged for Notes in certificated form, redeemed,
converted, repurchased or canceled, exchanged for Notes in certificated form or
transferred to a transferee who receives Notes in certificated form therefor or
any Note in certificated form is exchanged or transferred for part of a Note in
global form, the principal amount of such Note in global form shall, in
accordance with the standing procedures and instructions existing between the
Depositary and the Custodian, be appropriately reduced or increased, as the case
may be, and an endorsement shall be made on such Note in global form, by the
Trustee or the Custodian, at the direction of the Trustee, to reflect such
reduction or increase.
(e) Until the expiration of the holding period
applicable to sales thereof under Rule 144(k) under the Securities Act (or any
successor provision), any stock certificate representing Common Stock issued
upon conversion of such Note shall bear a legend in substantially the following
form, unless such Common Stock has been sold pursuant to a registration
statement that has been declared effective under the Securities Act (and which
continues to be effective at the time of such transfer) or such Common Stock has
been issued upon conversion of Notes that have been transferred pursuant to a
registration statement that has been declared effective under the Securities
Act, or unless otherwise agreed by the Company in writing with written notice
thereof to the transfer agent:
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THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. THE HOLDER
HEREOF AGREES THAT UNTIL THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K)
UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), (1) IT WILL NOT
RESELL OR OTHERWISE TRANSFER THE COMMON STOCK EVIDENCED HEREBY EXCEPT
(A) TO HEARTPORT, INC. OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE
UNITED STATES TO A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN COMPLIANCE WITH RULE 144A, (C)
INSIDE THE UNITED STATES TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT)
THAT PRIOR TO SUCH TRANSFER FURNISHES TO BOSTON EQUISERVE, L.P. AS
TRANSFER AGENT (OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE COMMON STOCK EVIDENCED
HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRANSFER
AGENT OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), (D) OUTSIDE THE
UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF
SUCH TRANSFER); (2) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE 1(F) ABOVE), IT WILL FURNISH TO BOSTON EQUISERVE,
L.P. AS TRANSFER AGENT (OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE),
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION
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REQUIREMENTS OF THE SECURITIES ACT AND (3) IT WILL DELIVER TO EACH
PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED (OTHER
THAN A TRANSFER PURSUANT TO CLAUSE 1(F) ABOVE) A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE
EARLIER OF THE TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY PURSUANT
TO CLAUSE 1(F) ABOVE OR UPON ANY TRANSFER OF THE COMMON STOCK
EVIDENCED HEREBY AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE
TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE
TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT.
Any such Common Stock as to which such restrictions on transfer shall
have expired in accordance with their terms or as to which the conditions for
removal of the foregoing legend set forth therein have been satisfied may, upon
surrender of the certificates representing such shares of Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock, be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend required by
this Section 2.5(e).
(f) Any Note or Common Stock issued upon the
conversion or exchange of a Note that, prior to the expiration of the holding
period applicable to sales thereof under Rule 144(k) under the Securities Act
(or any successor provision), is purchased or owned by the Company or any
Affiliate thereof may not be resold by the Company or such Affiliate unless
registered under the Securities Act or resold pursuant to an exemption from the
registration requirements of the Securities Act in a transaction which results
in such Notes or Common Stock, as the case may be, no longer being "restricted
securities" (as defined under Rule 144).
Section 2.6 MUTILATED, DESTROYED, LOST OR STOLEN NOTES. In case
any Note shall become mutilated or be destroyed, lost or stolen, the Company in
its discretion may execute, and upon its written request the Trustee or an
authenticating agent appointed by the Trustee shall authenticate and make
available for delivery, a new Note, bearing a number not contemporaneously
outstanding, in exchange and substitution for the mutilated Note, or in lieu of
and in substitution for the Note so destroyed, lost or stolen. In every case
the applicant for a substituted Note shall furnish to the Company, to the
Trustee and, if applicable, to such authenticating agent such security or
indemnity as may be required by them to save each of them harmless for any loss,
liability, cost or expense caused by or connected with such substitution, and,
in every case of destruction, loss or theft, the applicant shall also furnish to
the Company, to
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the Trustee and, if applicable, to such authenticating agent evidence to their
satisfaction of the destruction, loss or theft of such Note and of the ownership
thereof.
Following receipt by the Trustee or such authenticating agent, as the
case may be, of satisfactory security or indemnity and evidence, as described in
the preceding paragraph, the Trustee or such authenticating agent may
authenticate any such substituted Note and make available for delivery such
Note. Upon the issuance of any substituted Note, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses connected therewith.
In case any Note which has matured or is about to mature or has been called for
redemption or is about to be converted into Common Stock shall become mutilated
or be destroyed, lost or stolen, the Company may, instead of issuing a
substitute Note, pay or authorize the payment of or convert or authorize the
conversion of the same (without surrender thereof except in the case of a
mutilated Note), as the case may be, if the applicant for such payment or
conversion shall furnish to the Company, to the Trustee and, if applicable, to
such authenticating agent such security or indemnity as may be required by them
to save each of them harmless for any loss, liability, cost or expense caused by
or connected with such substitution, and, in case of destruction, loss or theft,
evidence satisfactory to the Company, the Trustee and, if applicable, any paying
agent or conversion agent of the destruction, loss or theft of such Note and of
the ownership thereof.
Every substitute Note issued pursuant to the provisions of this
Section 2.6 by virtue of the fact that any Note is destroyed, lost or stolen
shall constitute an additional contractual obligation of the Company, whether or
not the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of (but shall be subject to all the limitations set
forth in) this Indenture equally and proportionately with any and all other
Notes duly issued hereunder. To the extent permitted by law, all Notes shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment or conversion of mutilated,
destroyed, lost or stolen Notes and shall preclude any and all other rights or
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment or conversion of negotiable
instruments or other securities without their surrender.
Section 2.7 TEMPORARY NOTES. Pending the preparation of Notes in
certificated form, the Company may execute and the Trustee or an authenticating
agent appointed by the Trustee shall, upon the written request of the Company,
authenticate and deliver temporary Notes (printed or lithographed). Temporary
Notes shall be issuable in any authorized denomination, and substantially in the
form of the Notes in certificated form, but with such omissions, insertions and
variations as may be appropriate for temporary Notes, all as may be determined
by the Company. Every such temporary Note shall be executed by the Company and
authenticated by the Trustee or such authenticating agent upon the same
conditions and in substantially the same manner, and with the same effect, as
the Notes in certificated form. Without unreasonable delay the Company will
execute and deliver to the Trustee or such authenticating agent Notes in
certificated form (other than in the case of Notes in global form) and thereupon
any or all temporary Notes (other than any such Note in global form) may be
surrendered in exchange therefor, at each office or agency maintained by the
Company pursuant
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to Section 5.2 and the Trustee or such authenticating agent shall authenticate
and make available for delivery in exchange for such temporary Notes an equal
aggregate principal amount of Notes in certificated form. Such exchange shall
be made by the Company at its own expense and without any charge therefor.
Until so exchanged, the temporary Notes shall in all respects be entitled to the
same benefits and subject to the same limitations under this Indenture as Notes
in certificated form authenticated and delivered hereunder.
Section 2.8 CANCELLATION OF NOTES PAID, ETC. All Notes surrendered
for the purpose of payment, redemption, conversion, exchange or registration of
transfer, shall, if surrendered to the Company or any paying agent or any Note
registrar or any conversion agent, be surrendered to the Trustee and promptly
canceled by it, or, if surrendered to the Trustee, shall be promptly canceled by
it, and no Notes shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Indenture. The Trustee shall return such
canceled Notes to the Company. If the Company shall acquire any of the Notes,
such acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Notes unless and until the same are delivered
to the Trustee for cancellation.
Section 2.9 CUSIP NUMBERS. The Company in issuing the Notes may
use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Noteholders;
PROVIDED that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Notes or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption shall not
be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE III
REDEMPTION OF NOTES
Section 3.1 REDEMPTION PRICES. The Company may not redeem the
Notes prior to May 4, 2000. At any time on or after May 4, 2000, the Company
may, at its option, redeem all or from time to time any part of the Notes on any
date prior to maturity, upon notice as set forth in Section 3.2, and at the
optional redemption prices set forth in the form of Note attached as Exhibit A
hereto, together with accrued interest to, but excluding, the date fixed for
redemption.
Section 3.2 NOTICE OF REDEMPTION; SELECTION OF NOTES. In case the
Company shall desire to exercise the right to redeem all or, as the case may be,
any part of the Notes pursuant to Section 3.1, it shall fix a date for
redemption and it or, at its written request received by the Trustee not fewer
than forty-five (45) days prior (or such shorter period of time as may be
acceptable to the Trustee) to the date fixed for redemption, the Trustee in the
name of and at the expense of the Company, shall mail or cause to be mailed a
notice of such redemption at least 30 days prior to the date fixed for
redemption to the holders of Notes so to be redeemed as a whole
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or in part at their last addresses as the same appear on the Note register
(PROVIDED that if the Company shall give such notice, it shall also give written
notice, and written notice of the Notes to be redeemed, to the Trustee). Such
mailing shall be by first class mail. The notice if mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the holder receives such notice. In any case, failure to give such notice by
mail or any defect in the notice to the holder of any Note designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Note.
Each such notice of redemption shall specify the aggregate principal
amount of Notes to be redeemed, the CUSIP numbers, the date fixed for redemption
which shall be a Business Day, the redemption price at which Notes are to be
redeemed, the place or places of payment, that payment will be made upon
presentation and surrender of such Notes, that interest accrued to the date
fixed for redemption will be paid as specified in said notice, and that on and
after said date interest thereon or on the portion thereof to be redeemed will
cease to accrue. Such notice shall also state the current Conversion Price and
the date on which the right to convert such Notes or portions thereof into
Common Stock will expire. If fewer than all the Notes are to be redeemed, the
notice of redemption shall identify the Notes to be redeemed. In case any Note
is to be redeemed in part only, the notice of redemption shall state the portion
of the principal amount thereof to be redeemed and shall state that on and after
the date fixed for redemption, upon surrender of such Note, a new Note or Notes
in principal amount equal to the unredeemed portion thereof will be issued.
On or prior to the redemption date specified in the notice of
redemption given as provided in this Section 3.2, the Company will deposit with
the Trustee or with one or more paying agents (or, if the Company is acting as
its own paying agent, set aside, segregate and hold in trust as provided in
Section 5.4) an amount of money sufficient to redeem on the redemption date all
the Notes (or portions thereof) so called for redemption (other than those
theretofore surrendered for conversion into Common Stock) at the appropriate
redemption price, together with accrued interest to, but excluding, the date
fixed for redemption; PROVIDED that if such payment is made on the redemption
date it must be received by the Trustee or paying agent, as the case may be, by
10:00 a.m. New York City time, on such date. If any Note called for redemption
is converted pursuant hereto, any money deposited with the Trustee or any paying
agent or so segregated and held in trust for the redemption of such Note shall
be paid to the Company upon its written request, or, if then held by the Company
shall be discharged from such trust. Whenever any Notes are to be redeemed, the
Company will give the Trustee written notice in the form of an Officers'
Certificate not fewer than forty-five (45) days (or such shorter period of time
as may be acceptable to the Trustee) prior to the redemption date as to the
aggregate principal amount of Notes to be redeemed.
If fewer than all the Notes are to be redeemed, the Trustee shall
select the Notes or portions thereof of the 144A Note, the Regulation S Note or
the Notes in certificated form to be redeemed (in principal amounts of $1,000 or
integral multiples thereof), by lot or, in its discretion, on a pro rata basis.
If any Note selected for partial redemption is converted in part after such
selection, the converted portion of such Note shall be deemed (so far as may be)
to be the portion to be selected for redemption. The Notes (or portions
thereof) so selected shall be
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deemed duly selected for redemption for all purposes hereof, notwithstanding
that any such Note is converted as a whole or in part before the mailing of the
notice of redemption.
Upon any redemption of less than all Notes, the Company and the
Trustee may (but need not) treat as outstanding any Notes surrendered for
conversion during the period of fifteen (15) days next preceding the mailing of
a notice of redemption and may (but need not) treat as outstanding any Note
authenticated and delivered during such period in exchange for the unconverted
portion of any Note converted in part during such period.
Section 3.3 PAYMENT OF NOTES CALLED FOR REDEMPTION. If notice of
redemption has been given as above provided, the Notes or portion of Notes with
respect to which such notice has been given shall, unless converted into Common
Stock pursuant to the terms hereof, become due and payable on the date fixed for
redemption and at the place or places stated in such notice at the applicable
redemption price, together with interest accrued to (but excluding) the date
fixed for redemption, and on and after said date (unless the Company shall
default in the payment of such Notes at the redemption price, together with
interest accrued to said date) interest on the Notes or portion of Notes so
called for redemption shall cease to accrue and such Notes shall cease after the
close of business on the Business Day next preceding the date fixed for
redemption to be convertible into Common Stock and, except as provided in
Sections 8.5 and 13.4, to be entitled to any benefit or security under this
Indenture, and the holders thereof shall have no right in respect of such Notes
except the right to receive the redemption price thereof and unpaid interest to
(but excluding) the date fixed for redemption. On presentation and surrender of
such Notes at a place of payment in said notice specified, the said Notes or the
specified portions thereof shall be paid and redeemed by the Company at the
applicable redemption price, together with interest accrued thereon to (but
excluding) the date fixed for redemption; PROVIDED that, if the applicable
redemption date is an interest payment date, the semi-annual payment of interest
becoming due on such date shall be payable to the holders of such Notes
registered as such on the relevant record date instead of the holders
surrendering such Notes for redemption on such date.
Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and make available for delivery to
the holder thereof, at the expense of the Company, a new Note or Notes, of
authorized denominations, in principal amount equal to the unredeemed portion of
the Notes so presented.
Notwithstanding the foregoing, the Trustee shall not redeem any Notes
or mail any notice of optional redemption during the continuance of a default in
payment of interest or premium on the Notes or of any Event of Default of which,
in the case of any Event of Default other than under Sections 7.1 (a) or 7.1
(b), a Responsible Officer of the Trustee has knowledge. If any Note called for
redemption shall not be so paid upon surrender thereof for redemption, the
principal and premium, if any, shall, until paid or duly provided for, bear
interest from the date fixed for redemption at the rate borne by the Note and
such Note shall remain convertible into Common Stock until the principal and
premium, if any, shall have been paid or duly provided for.
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Section 3.4 CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In
connection with any redemption of Notes, the Company may arrange for the
purchase and conversion of any Notes by an agreement with one or more investment
bankers or other purchasers to purchase such Notes by paying to the Trustee in
trust for the Noteholders, on or before the date fixed for redemption, an amount
not less than the applicable redemption price, together with interest accrued to
(but excluding) the date fixed for redemption, of such Notes. Notwithstanding
anything to the contrary contained in this Article III, the obligation of the
Company to pay the redemption price of such Notes, together with interest
accrued to (but excluding) the date fixed for redemption, shall be deemed to be
satisfied and discharged to the extent such amount is so paid by such
purchasers. If such an agreement is entered into, a copy of which will be filed
with the Trustee prior to the date fixed for redemption, any Notes not duly
surrendered for conversion by the holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such holders and (notwithstanding anything to the contrary
contained in Article XV) surrendered by such purchasers for conversion, all as
of immediately prior to the close of business on the date fixed for redemption
(and the right to convert any such Notes shall be extended through such time),
subject to payment of the above amount as aforesaid. At the direction of the
Company, the Trustee shall hold and dispose of any such amount paid to it in the
same manner as it would monies deposited with it by the Company for the
redemption of Notes. Without the Trustee's prior written consent, no
arrangement between the Company and such purchasers for the purchase and
conversion of any Notes shall increase or otherwise affect any of the powers,
duties, responsibilities or obligations of the Trustee as set forth in this
Indenture.
Section 3.5 REDEMPTION AT OPTION OF HOLDERS.
(a) If there shall occur a Fundamental Change, then
each Noteholder shall have the right, at such holder's option, to require the
Company to redeem all of such holder's Notes, or any portion thereof that is an
integral multiple of $1,000 principal amount, on the date (the "Repurchase
Date") that is 30 days after the date of the Company Notice (as defined in
Section 3.5(b) below) of such Fundamental Change (or, if such 30th day is not a
Business Day, the next succeeding Business Day). Such repayment shall be made
at the following prices (expressed as percentages of the principal amount) in
the event of a Repurchase Date occurring during the 12-month period beginning
May 1:
Year Percentage Year Percentage
---- ---------- ---- ----------
1997......... 107.250% 2001........... 103.107%
1998......... 106.214 2002........... 102.071
1999......... 105.179 2003........... 101.036
2000......... 104.143
and 100% at May 1, 2004; PROVIDED that if the Applicable Price with respect to
the Fundamental Change is less than the Reference Market Price, the Company
shall redeem such Notes at a price
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equal to the foregoing redemption price multiplied by the fraction obtained by
dividing the Applicable Price by the Reference Market Price. In each case, the
Company shall also pay to such holders accrued interest to, but excluding, the
Repurchase Date on the redeemed Notes; PROVIDED that if such Repurchase Date is
May 1 or November 1, then the interest payable on such date shall be paid to the
holder of record of the Note on the next preceding April 15 or October 15.
Upon presentation of any Note redeemed in part only, the Company shall
execute and, upon the Company's written direction to the Trustee, the Trustee
shall authenticate and deliver to the holder thereof, at the expense of the
Company, a new Note or Notes, of authorized denominations, in principal amount
equal to the unredeemed portion of the Notes so presented.
(b) On or before the tenth day after the occurrence of
a Fundamental Change, the Company, or, at its written request (which must be
received by the Trustee at least five Business Days prior to the date the
Trustee is requested to give notice as described below), the Trustee in the name
of and at the expense of the Company, shall mail or cause to be mailed to all
holders of record on the date of the Fundamental Change a notice (the "Company
Notice") of the occurrence of such Fundamental Change and of the redemption
right at the option of the holders arising as a result thereof. Such notice
shall be mailed in the manner and with the effect set forth in the first
paragraph of Section 3.2. The Company shall also deliver a copy of the Company
Notice to the Trustee at such time as it is mailed to Noteholders.
Each Company Notice shall specify the circumstances constituting the
Fundamental Change, the Repurchase Date, the price at which the Company shall be
obligated to redeem Notes, the latest time on the Repurchase Date by which the
holder must exercise the redemption right (the "Fundamental Change Expiration
Time"), that the holder shall have the right to withdraw any Notes surrendered
prior to the Fundamental Change Expiration Time, a description of the procedure
which a Noteholder must follow to exercise such redemption right and to withdraw
any surrendered Notes, the place or places where the holder is to surrender such
holder's Notes, and the amount of interest accrued on each Note to the
Repurchase Date.
No failure of the Company to give the foregoing notices and no defect
therein shall limit the Noteholders' redemption rights or affect the validity of
the proceedings for the repurchase of the Notes pursuant to this Section 3.5.
(c) For a Note to be so repaid at the option of the
holder, the Company must receive at the office or agency of the Company
maintained for that purpose or, at the option of such holder, the Corporate
Trust Office, such Note with the form entitled "Option to Elect Repayment Upon A
Fundamental Change" on the reverse thereof duly completed, together with such
Notes duly endorsed for transfer, on or before the Fundamental Change Expiration
Time. All questions as to the validity, eligibility (including time of receipt)
and acceptance of any Note for repayment shall be determined by the Company,
whose determination shall be final and binding absent manifest error.
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(d) On or prior to the Repurchase Date, the Company
will deposit with the Trustee or with one or more paying agents (or, if the
Company is acting as its own paying agent, set aside, segregate and hold in
trust as provided in Section 5.4) an amount of money sufficient to repay on the
Repurchase Date all the Notes to be repaid on such date at the appropriate
redemption price, together with accrued interest to (but excluding) the
Repurchase Date; provided that if such payment is made on the Repurchase Date it
must be received by the Trustee or paying agent, as the case may be, by 10:00
a.m. New York City time, on such date. Payment for Notes surrendered for
redemption (and not withdrawn) prior to the Fundamental Change Expiration Time
will be made promptly (but in no event more than five Business Days) following
the Repurchase Date by mailing checks for the amount payable to the holders of
such Notes entitled thereto as they shall appear on the registry books of the
Company.
(e) In the case of a consolidation, merger,
conveyance, transfer or lease to which Section 15.6 applies, in which the Common
Stock of the Company is changed or exchanged as a result into the right to
receive securities, cash or other property which includes shares of Common Stock
of the Company or another person that are, or upon issuance will be, traded on a
United States national securities exchange or approved for trading on an
established automated over-the-counter trading market in the United States and
such shares constitute at the time such change or exchange becomes effective in
excess of 50% of the aggregate fair market value of such securities, cash and
other property (as determined by the Company, which determination shall be
conclusive and binding), then the person formed by such consolidation or
resulting from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Trustee a supplemental indenture (accompanied
by an Opinion of Counsel that such supplemental indenture complies with the
Trust Indenture Act as in force at the date of execution of such supplemental
indenture) modifying the provisions of this Indenture relating to the right of
holders of the Notes to cause the Company to repurchase the Notes following a
Fundamental Change, including without limitation the applicable provisions of
this Section 3.5 and the definitions of the Applicable Price, Common Stock,
Fundamental Change and Reference Market Price, as appropriate, as determined in
good faith by the Company (which determination shall be conclusive and binding),
to make such provisions apply to the common stock and the issuer thereof if
different from the Company and Common Stock of the Company (in lieu of the
Company and the Common Stock of the Company).
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ARTICLE IV
SUBORDINATION OF NOTES
Section 4.1 AGREEMENT OF SUBORDINATION. The Company covenants and
agrees, and each holder of Notes issued hereunder by his acceptance thereof
likewise covenants and agrees, that all Notes shall be issued subject to the
provisions of this Article IV; and each Person holding any Note, whether upon
original issue or upon transfer, assignment or exchange thereof, accepts and
agrees to be bound by such provisions.
The payment of the principal of, premium, if any, and interest
(including Liquidated Damages, if any) on all Notes (including, but not limited
to, the redemption price with respect to the Notes called for redemption in
accordance with Section 3.2 or submitted for redemption in accordance with
Section 3.5, as the case may be, as provided in the Indenture) issued hereunder
shall, to the extent and in the manner hereinafter set forth, be subordinated
and subject in right of payment to the prior payment in full of all Senior
Indebtedness, whether outstanding at the date of this Indenture or thereafter
incurred.
No provision of this Article IV shall prevent the occurrence of any
default or Event of Default hereunder.
Section 4.2 PAYMENTS TO NOTEHOLDERS. No payment shall be made with
respect to the principal of, or premium, if any, or interest (including
Liquidated Damages, if any) on the Notes (including, but not limited to, the
redemption price with respect to the Notes to be called for redemption in
accordance with Section 3.2 or submitted for redemption in accordance with
Section 3.5, as the case may be, as provided in this Indenture), except payments
and distributions made by the Trustee as permitted by the first or second
paragraph of Section 4.5, if:
(i) a default in the payment of principal,
premium, if any, interest, rent or other obligations in respect of Senior
Indebtedness occurs and is continuing (or, in the case of Senior Indebtedness
for which there is a period of grace, in the event of such a default that
continues beyond the period of grace, if any, specified in the instrument or
lease evidencing such Senior Indebtedness), unless and until such default shall
have been cured or waived or shall have ceased to exist; or
(ii) a default, other than a payment
default, on any Designated Senior Indebtedness occurs and is continuing that
then permits holders of such Designated Senior Indebtedness to accelerate its
maturity and the Trustee receives a notice of the default (a "Payment Blockage
Notice") from a holder of Designated Senior Indebtedness, a Representative of
Designated Senior Indebtedness, or the Company.
If the Trustee receives any Payment Blockage Notice pursuant to clause
(ii) above, no subsequent Payment Blockage Notice shall be effective for
purposes of this Section unless and until (A) at least 365 days shall have
elapsed since the initial effectiveness of the immediately prior Payment
Blockage Notice, and (B) all scheduled payments of principal, premium, if any,
and interest on the Notes that have come due have been paid in full in cash. No
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nonpayment default that existed or was continuing on the date of delivery of any
Payment Blockage Notice to the Trustee shall be, or be made, the basis for a
subsequent Payment Blockage Notice.
The Company may and shall resume payments on and distributions in
respect of the Notes upon the earlier of:
(1) the date upon which the default is
cured or waived or ceases to exist, or
(2) in the case of a default referred
to in clause (ii) above, 179 days pass after notice is received if the maturity
of such Designated Senior Indebtedness has not been accelerated,
unless this Article IV otherwise prohibits the payment or distribution at the
time of such payment or distribution.
Upon any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full in cash or other payment
satisfactory to the holders of such Senior Indebtedness, or payment thereof in
accordance with its terms provided for in cash or other payment satisfactory to
the holders of such Senior Indebtedness before any payment is made on account of
the principal of, premium, if any, or interest on the Notes (except payments
made pursuant to Article XIII from monies deposited with the Trustee pursuant
thereto prior to commencement of proceedings for such dissolution, winding-up,
liquidation or reorganization); and upon any such dissolution or winding-up or
liquidation or reorganization of the Company or bankruptcy, insolvency,
receivership or other proceeding, any payment by the Company, or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, to which the holders of the Notes or the Trustee would be entitled,
except for the provision of this Article IV, shall (except as aforesaid) be paid
by the Company or by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, or by the holders of
the Notes or by the Trustee under this Indenture if received by them or it,
directly to the holders of Senior Indebtedness (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders, or
as otherwise required by law or a court order) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay all
Senior Indebtedness in full, in cash or other payment satisfactory to the
holders of such Senior Indebtedness, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness, before any
payment or distribution is made to the holders of the Notes or to the Trustee.
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For purposes of this Article IV, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article IV with respect
to the Notes to the payment of all Senior Indebtedness which may at the time be
outstanding; PROVIDED that (i) the Senior Indebtedness is assumed by the new
corporation, if any, resulting from any reorganization or readjustment, and (ii)
the rights of the holders of Senior Indebtedness (other than leases which are
not assumed by the Company or the new corporation, as the case may be) are not,
without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article XII shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 4.2
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article XII.
In the event of the acceleration of the Notes because of an Event of
Default, no payment or distribution shall be made to the Trustee or any holder
of Notes in respect of the principal of, premium, if any, or interest on the
Notes (including, but not limited to, the redemption price with respect to the
Notes called for redemption in accordance with Section 3.2 or submitted for
redemption in accordance with Section 3.5, as the case may be, as provided in
the Indenture), except payments and distributions made by the Trustee as
permitted by the first or second paragraph of Section 4.5, until all Senior
Indebtedness has been paid in full in cash or other payment satisfactory to the
holders of Senior Indebtedness or such acceleration is rescinded in accordance
with the terms of this Indenture. If payment of the Notes is accelerated
because of an Event of Default, the Company shall promptly notify holders of
Senior Indebtedness of the acceleration.
In the event that, notwithstanding the foregoing provisions, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities (including, without limitation, by way
of setoff or otherwise), prohibited by the foregoing provisions in this Section
4.2, shall be received by the Trustee or the holders of the Notes before all
Senior Indebtedness is paid in full in cash or other payment satisfactory to the
holders of such Senior Indebtedness, or provision is made for such payment
thereof in accordance with its terms in cash or other payment satisfactory to
the holders of such Senior Indebtedness, such payment or distribution shall be
held in trust for the benefit of and shall be paid over or delivered to the
holders of Senior Indebtedness or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing any Senior Indebtedness may have been issued, as their respective
interests may appear, as calculated by the Company, for application to the
payment of any Senior Indebtedness remaining unpaid to the extent necessary to
pay all Senior Indebtedness in full in cash or other payment satisfactory to the
holders of such Senior Indebtedness, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Indebtedness.
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Nothing in this Section 4.2 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 8.6. This Section 4.2 shall be subject
to the further provisions of Section 4.5.
Section 4.3 SUBROGATION OF NOTES. Subject to the payment in full
of all Senior Indebtedness, the rights of the holders of the Notes shall be
subrogated to the extent of the payments or distributions made to the holders of
such Senior Indebtedness pursuant to the provisions of this Article IV (equally
and ratably with the holders of all indebtedness of the Company which by its
express terms is subordinated to other indebtedness of the Company to
substantially the same extent as the Notes are subordinated and is entitled to
like rights of subrogation) to the rights of the holders of Senior Indebtedness
to receive payments or distributions of cash, property or securities of the
Company applicable to the Senior Indebtedness until the principal, premium, if
any, and interest on the Notes shall be paid in full; and, for the purposes of
such subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the holders of the
Notes or the Trustee would be entitled except for the provisions of this Article
IV, and no payment over pursuant to the provisions of this Article IV, to or for
the benefit of the holders of Senior Indebtedness by holders of the Notes or the
Trustee, shall, as between the Company, its creditors other than holders of
Senior Indebtedness, and the holders of the Notes, be deemed to be a payment by
the Company to or on account of the Senior Indebtedness; and no payments or
distributions of cash, property or securities to or for the benefit of the
holders of the Notes pursuant to the subrogation provisions of this Article IV,
which would otherwise have been paid to the holders of Senior Indebtedness shall
be deemed to be a payment by the Company to or for the account of the Notes. It
is understood that the provisions of this Article IV are and are intended solely
for the purposes of defining the relative rights of the holders of the Notes, on
the one hand, and the holders of the Senior Indebtedness, on the other hand.
Nothing contained in this Article IV or elsewhere in this Indenture or
in the Notes is intended to or shall impair, as among the Company, its creditors
other than the holders of Senior Indebtedness, and the holders of the Notes, the
obligation of the Company, which is absolute and unconditional, to pay to the
holders of the Notes the principal of (and premium, if any) and interest on the
Notes as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the holders of
the Notes and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or the
holder of any Note from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article IV of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article IV, the Trustee, subject to the provisions of Section 8.1, and
the holders of the Notes shall be entitled to rely upon any order or decree made
by any court of competent jurisdiction in which such bankruptcy, dissolution,
winding-up, liquidation or reorganization proceedings are pending, or a
certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent
or other person making such payment or distribution, delivered to the Trustee or
to the holders of the Notes, for
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the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon and all other facts pertinent
thereto or to this Article IV.
Section 4.4 AUTHORIZATION TO EFFECT SUBORDINATION. Each holder of
a Note by the holder's acceptance thereof authorizes and directs the Trustee on
the holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article IV and appoints the
Trustee to act as the holder's attorney-in-fact for any and all such purposes.
If the Trustee does not file a proper proof of claim or proof of debt in the
form required in any proceeding referred to in the third paragraph of Section
7.2 hereof at least 30 days before the expiration of the time to file such
claim, the holders of any Senior Indebtedness or their representatives are
hereby authorized to file an appropriate claim for and on behalf of the holders
of the Notes.
Section 4.5 NOTICE TO TRUSTEE. The Company shall give prompt
written notice in the form of an Officers' Certificate to a Responsible Officer
of the Trustee and to any paying agent of any fact known to the Company which
would prohibit the making of any payment of monies to or by the Trustee or any
paying agent in respect of the Notes pursuant to the provisions of this Article
IV. Notwithstanding the provisions of this Article IV or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts which would prohibit the making of any payment of monies to or by
the Trustee in respect of the Notes pursuant to the provisions of this Article
IV, unless and until a Responsible Officer of the Trustee shall have received
written notice thereof at the Corporate Trust Office from the Company (in the
form of an Officers' Certificate) or a Representative or a holder or holders of
Senior Indebtedness or from any trustee thereof; and before the receipt of any
such written notice, the Trustee, subject to the provisions of Section 8.1,
shall be entitled in all respects to assume that no such facts exist; PROVIDED
that if on a date not less than two Business Days prior to the date upon which
by the terms hereof any such monies may become payable for any purpose
(including, without limitation, the payment of the principal of, or premium, if
any, or interest on any Note) the Trustee shall not have received, with respect
to such monies, the notice provided for in this Section 4.5, then, anything
herein contained to the contrary notwithstanding, the Trustee shall have full
power and authority to apply moneys received to the purpose for which they were
received, and shall not be affected by any notice to the contrary which may be
received by it on or after such prior date.
Notwithstanding anything in this Article IV to the contrary, nothing
shall prevent any payment by the Trustee to the Noteholders of monies deposited
with it pursuant to Section 13.1, and any such payment shall not be subject to
the provisions of Section 4.1 or 4.2.
The Trustee, subject to the provisions of Section 8.1, shall be
entitled to rely on the delivery to it of a written notice by a Representative
or a person representing himself to be a holder of Senior Indebtedness (or a
trustee on behalf of such holder) to establish that such notice has been given
by a Representative or a holder of Senior Indebtedness or a trustee on behalf of
any such holder or holders. The Trustee shall not be required to make any
payment or distribution to or on behalf of a holder of Senior Indebtedness
pursuant to this Article IV unless it
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has received satisfactory evidence as to the amount of Senior Indebtedness held
by such person, the extent to which such person is entitled to participate in
such payment or distribution and any other facts pertinent to the rights of such
person under this Article IV.
Section 4.6 TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS. The Trustee
in its individual capacity shall be entitled to all the rights set forth in this
Article IV in respect of any Senior Indebtedness at any time held by it, to the
same extent as any other holder of Senior Indebtedness, and nothing in Section
8.13 or elsewhere in this Indenture shall deprive the Trustee of any of its
rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article IV, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 8.1, the Trustee shall not be liable to any holder of
Senior Indebtedness (i) for any failure to make any payments or distributions to
such holder or (ii) if it shall pay over or deliver to holders of Notes, the
Company or any other person money or assets to which any holder of Senior
Indebtedness shall be entitled by virtue of this Article IV or otherwise.
Section 4.7 NO IMPAIRMENT OF SUBORDINATION. No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
Section 4.8 CERTAIN CONVERSIONS DEEMED PAYMENT. For the purposes
of this Article IV only, (1) the issuance and delivery of junior securities upon
conversion of Notes in accordance with Article XV shall not be deemed to
constitute a payment or distribution on account of the principal of (or premium,
if any) or interest on Notes or on account of the purchase or other acquisition
of Notes, and (2) the payment, issuance or delivery of cash (except in
satisfaction of fractional shares pursuant to Section 15.2), property or
securities (other than junior securities) upon conversion of a Note shall be
deemed to constitute payment on account of the principal of such Note. For the
purposes of this Section 4.8, the term "junior securities" means (a) shares of
any stock of any class of the Company, or (b) securities of the Company which
are subordinated in right of payment to all Senior Indebtedness which may be
outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Notes are so
subordinated as provided in this Article. Nothing contained in this Article IV
or elsewhere in this Indenture or in the Notes is intended to or shall impair,
as among the Company, its creditors (other than holders of Senior Indebtedness)
and the Noteholders, the right, which is absolute and unconditional, of the
Holder of any Note to convert such Note in accordance with Article XV.
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Section 4.9 ARTICLE APPLICABLE TO PAYING AGENTS. If at any time
any paying agent other than the Trustee shall have been appointed by the Company
and be then acting hereunder, the term "Trustee" as used in this Article shall
(unless the context otherwise requires) be construed as extending to and
including such paying agent within its meaning as fully for all intents and
purposes as if such paying agent were named in this Article in addition to or in
place of the Trustee; PROVIDED, HOWEVER, that the first paragraph of Section 4.5
shall not apply to the Company or any Affiliate of the Company if it or such
Affiliate acts as paying agent.
The Trustee shall not be responsible for the actions or inactions of
any other paying agents (including the Company if acting as its own paying
agent) and shall have no control of any funds held by such other paying agents.
Section 4.10 SENIOR INDEBTEDNESS ENTITLED TO RELY. The holders of
Senior Indebtedness (including, without limitation, Designated Senior
Indebtedness) shall have the right to rely upon this Article IV, and no
amendment or modification of the provisions contained herein shall diminish the
rights of such holders unless such holders shall have agreed in writing thereto.
Section 4.11 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT. Upon any payment or distribution of assets of the Company
referred to in this Article, the Trustee and the Noteholders shall be entitled
to rely upon any order or decree entered by any court of competent jurisdiction
in which such insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, liquidating trustee, custodian,
receiver, assignee for the benefit of creditors, agent or other person making
such payment or distribution, delivered to the Trustee or to the Noteholders,
for the purpose of ascertaining the persons entitled to participate in such
payment or distribution, the holders of Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article.
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
Section 5.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The
Company covenants and agrees that it will duly and punctually pay or cause to be
paid the principal of and premium, if any, and interest on (including Liquidated
Damages, if any) each of the Notes at the places, at the respective times and in
the manner provided herein and in the Notes. Each installment of interest on
the Notes due on any semi-annual interest payment date may be paid either (i) by
check mailed to the address of the person entitled thereto as it appears in the
Note register (provided that the holder of Notes with an aggregate principal
amount in excess of $2,000,000 shall, at the written election of such holder, be
paid by wire transfer in immediately available funds) or (ii) by transfer to an
account maintained by such person located in the United
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States; provided, however, that payments to the Depositary will be made by wire
transfer of immediately available funds to the account of Depositary or its
nominee.
Section 5.2 MAINTENANCE OF OFFICE OR AGENCY. The Company will
maintain an office or agency where the Notes may be surrendered for registration
of transfer or exchange or for presentation for payment or for conversion or
redemption and where notices and demands to or upon the Company in respect of
the Notes and this Indenture may be served. The Company will give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency not designated or appointed by the Trustee. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office.
The Company may also from time to time designate co-registrars and one
or more other offices or agencies where the Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations. The Company will give prompt written notice to any such
designation or rescission and of any change in the location of any such other
office or agency.
The Company hereby initially designates the Trustee as paying agent,
Note registrar, Custodian and conversion agent and the Corporate Trust Office of
the Trustee as the office or agency of the Company for each of the aforesaid
purposes.
So long as the Trustee is the Note registrar, the Trustee agrees to
mail, or cause to be mailed, the notices set forth in Section 8.10(a) and the
third paragraph of Section 8.11. If co-registrars have been appointed in
accordance with this Section, the Trustee shall mail such notices only to the
Company and the holders of Notes it can identify from its records.
Section 5.3 APPOINTMENTS TO FILL VACANCIES IN TRUSTEE'S OFFICE.
The Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 8.10, a Trustee, so
that there shall at all times be a Trustee hereunder.
Section 5.4 PROVISIONS AS TO PAYING AGENT.
(a) If the Company shall appoint a paying agent other
than the Trustee, or if the Trustee shall appoint such a paying agent, it will
cause such paying agent to execute and deliver to the Trustee an instrument in
which such agent shall agree with the Trustee, subject to the provisions of this
Section 5.4:
(1) that it will hold all sums held by it as such
agent for the payment of the principal of and premium, if any, or interest on
the Notes (whether such sums have been paid to it by the Company or by any other
obligor on the Notes) in trust for the benefit of the holders of the Notes;
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(2) that it will give the Trustee notice of any
failure by the Company (or by any other obligor on the Notes) to make any
payment of the principal of and premium, if any, or interest on the Notes when
the same shall be due and payable; and
(3) that at any time during the continuance of an
Event of Default, upon request of the Trustee, it will forthwith pay to the
Trustee all sums so held in trust.
The Company shall, on or before each due date of the principal of,
premium, if any, or interest on the Notes, deposit with the paying agent a sum
sufficient to pay such principal, premium, if any, or interest, and (unless such
paying agent is the Trustee) the Company will promptly notify the Trustee of any
failure to take such action; PROVIDED that if such deposit is made on the due
date, such deposit shall be received by the paying agent by 10:00 a.m. New York
City time, on such date.
(b) If the Company shall act as its own paying agent,
it will, on or before each due date of the principal of, premium, if any, or
interest on the Notes, set aside, segregate and hold in trust for the benefit of
the holders of the Notes a sum sufficient to pay such principal, premium, if
any, or interest so becoming due and will notify the Trustee of any failure to
take such action and of any failure by the Company (or any other obligor under
the Notes) to make any payment of the principal of, premium, if any, or interest
on the Notes when the same shall become due and payable.
(c) Anything in this Section 5.4 to the contrary
notwithstanding, the Company may, at any time, for the purpose of obtaining a
satisfaction and discharge of this Indenture, or for any other reason, pay or
cause to be paid to the Trustee all sums held in trust by the Company or any
paying agent hereunder as required by this Section 5.4, such sums to be held by
the Trustee upon the trusts herein contained and upon such payment by the
Company or any paying agent to the Trustee, the Company or such paying agent
shall be released from all further liability with respect to such sums.
(d) Anything in this Section 5.4 to the contrary
notwithstanding, the agreement to hold sums in trust as provided in this Section
5.4 is subject to Sections 13.3 and 13.4.
(e) The Trustee shall not be responsible for the
actions of any other paying agents (including the Company if acting as its own
paying agent) and shall have no control of any funds held by such other paying
agents.
Section 5.5 EXISTENCE. Subject to Article XII, the Company will do
or cause to be done all things necessary to preserve and keep in full force and
effect its existence, rights (charter and statutory) and franchises; PROVIDED,
HOWEVER, that the Company shall not be required to preserve any such right or
franchise if the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the holders.
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Section 5.6 MAINTENANCE OF PROPERTIES. The Company will cause all
properties used or useful in the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; PROVIDED, HOWEVER, that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of its business or the business of any Subsidiary and not
disadvantageous in any material respect to the holders.
Section 5.7 PAYMENT OF TAXES AND OTHER CLAIMS. The Company will
pay or discharge, or cause to be paid or discharged, before the same may become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, (ii) all claims for labor, materials
and supplies which, if unpaid, might by law become a lien or charge upon the
property of the Company or any Subsidiary, and (iii) all stamps and other
duties, if any, which may be imposed by the United States or any political
subdivision thereof or therein in connection with the issuance, transfer,
exchange or conversion of any Notes or with respect to this Indenture; PROVIDED,
HOWEVER, that, in the case of clauses (i) and (ii), the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim (A) if the failure to do so will not, in the
aggregate, have a material adverse impact on the Company, or (B) if the amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
Section 5.8 RULE 144A INFORMATION REQUIREMENT. Within the period
prior to the expiration of the holding period applicable to sales thereof under
Rule 144(k) under the Securities Act (or any successor provision), the Company
covenants and agrees that it shall, during any period in which it is not subject
to Section 13 or 15(d) under the Exchange Act, make available to any holder or
beneficial holder of Notes or any Common Stock issued upon conversion thereof
which continue to be Restricted Securities in connection with any sale thereof
and any prospective purchaser of Notes or such Common Stock from such holder or
beneficial holder, the information required pursuant to Rule 144A(d)(4) under
the Securities Act upon the request of any holder or beneficial holder of the
Notes or such Common Stock and it will take such further action as any holder or
beneficial holder of such Notes or such Common Stock may reasonably request, all
to the extent required from time to time to enable such holder or beneficial
holder to sell its Notes or Common Stock without registration under the
Securities Act within the limitation of the exemption provided by Rule 144A, as
such Rule may be amended from time to time. Upon the request of any holder or
any beneficial holder of the Notes or such Common Stock, the Company will
deliver to such holder a written statement as to whether it has complied with
such requirements.
Section 5.9 STAY, EXTENSION AND USURY LAWS. The Company covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other
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law which would prohibit or forgive the Company from paying all or any portion
of the principal of or interest on the Notes as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture and the Company (to the extent it
may lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law has been
enacted.
Section 5.10 COMPLIANCE CERTIFICATE. The Company shall deliver to
the Trustee, within 120 days after the end of each fiscal year of the Company, a
certificate signed by either the principal executive officer, principal
financial officer or principal accounting officer of the Company, stating
whether or not to the best knowledge of the signer thereof the Company is in
default in the performance and observance of any of the terms, provisions and
conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and status thereof of which
the signer may have knowledge.
The Company will deliver to the Trustee, forthwith upon becoming
aware of any default in the performance or observance of any covenant,
agreement or condition contained in this Indenture, or any Event of Default,
an Officers' Certificate specifying with particularity such default or Event
of Default and further stating what action the Company has taken, is taking
or proposes to take with respect thereto.
Any notice required to be given under this Section 5.10 shall be
delivered to the Trustee at its Corporate Trust Office.
Section 5.11 FURTHER INSTRUMENTS AND ACTS. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.
ARTICLE VI
NOTEHOLDERS' LISTS AND REPORTS BY
THE COMPANY AND THE TRUSTEE
Section 6.1 NOTEHOLDERS' LISTS. The Company covenants and agrees
that it will furnish or cause to be furnished to the Trustee, semiannually, not
more than fifteen (15) days after each April 15 and October 15 in each year
beginning with November 1, 1997, and at such other times as the Trustee may
request in writing, within thirty (30) days after receipt by the Company of any
such request (or such lesser time as the Trustee may reasonably request in order
to enable it to timely provide any notice to be provided by it hereunder), a
list in such form as the Trustee may reasonably require of the names and
addresses of the holders of Notes as of a date not more than fifteen (15) days
(or such other date as the Trustee may reasonably request in order to so provide
any such notices) prior to the time such information is furnished, except that
no
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such list need be furnished by the Company to the Trustee so long as the Trustee
is acting as the sole Note registrar.
Section 6.2 PRESERVATION AND DISCLOSURE OF LISTS.
(a) The Trustee shall preserve, in as current a form
as is reasonably practicable, all information as to the names and addresses of
the holders of Notes contained in the most recent list furnished to it as
provided in Section 6.1 or maintained by the Trustee in its capacity as Note
registrar or co-registrar in respect of the Notes, if so acting. The Trustee
may destroy any list furnished to it as provided in Section 6.1 upon receipt of
a new list so furnished.
(b) The rights of Noteholders to communicate with
other holders of Notes with respect to their rights under this Indenture or
under the Notes, and the corresponding rights and duties of the Trustee, shall
be as provided by the Trust Indenture Act.
(c) Every Noteholder, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to names and addresses of holders of Notes made
pursuant to the Trust Indenture Act.
Section 6.3 REPORTS BY TRUSTEE.
(a) Within 60 days after May 31 of each year
commencing with the year 1997, the Trustee shall transmit to holders of Notes
such reports dated as of May 31 of the year in which such reports are made
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto.
(b) A copy of such report shall, at the time of such
transmission to holders of Notes, be filed by the Trustee with each stock
exchange and automated quotation system upon which the Notes are listed and with
the Company. The Company will notify the Trustee in writing within a reasonable
time when the Notes are listed on any stock exchange or automated quotation
system.
Section 6.4 REPORTS BY COMPANY. The Company shall file with the
Trustee (and the Commission if at any time after the Indenture becomes qualified
under the Trust Indenture Act), and transmit to holders of Notes, such
information, documents and other reports and such summaries thereof, as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant to such Act; PROVIDED that any such information, documents or
reports required to be filed with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act shall be filed with the Trustee within 15 days after the
same is so required to be filed with the Commission. Delivery of such reports,
information and documents to the Trustee is for informational purposes only and
the Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information
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contained therein, including the Company's compliance with any of its covenants
hereunder (as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
ARTICLE VII
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS
ON AN EVENT OF DEFAULT
Section 7.1 EVENTS OF DEFAULT. In case one or more of the
following Events of Default (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body) shall have occurred and
be continuing:
(a) default in the payment of any installment of
interest upon any of the Notes as and when the same shall become due and
payable, and continuance of such default for a period of thirty (30) days,
whether or not such payment is permitted under Article IV hereof; or
(b) default in the payment of the principal of and
premium, if any, on any of the Notes as and when the same shall become due and
payable either at maturity or in connection with any redemption pursuant to
Article III, by acceleration or otherwise, whether or not such payment is
permitted under Article IV hereof; or
(c) failure on the part of the Company duly to observe
or perform any other of the covenants or agreements on the part of the Company
in the Notes or in this Indenture (other than a covenant or agreement a default
in whose performance or whose breach is elsewhere in this Section 7.1
specifically dealt with) continued for a period of sixty (60) days after the
date on which written notice of such failure, requiring the Company to remedy
the same, shall have been given to the Company by the Trustee, or to the Company
and a Responsible Officer of the Trustee by the holders of at least 25 percent
in aggregate principal amount of the Notes at the time outstanding determined in
accordance with Section 9.4; or
(d) the Company shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due; or
(e) an involuntary case or other proceeding shall be
commenced against the Company seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect
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or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of ninety (90) consecutive days;
then, and in each and every such case (other than an Event of Default
specified in Section 7.1 (d) or (e)), unless the principal of all of the Notes
shall have already become due and payable, either the Trustee or the holders of
not less than 25 percent in aggregate principal amount of the Notes then
outstanding hereunder determined in accordance with Section 9.4, by notice in
writing to the Company (and to the Trustee if given by Noteholders), may declare
the principal of all the Notes and the interest accrued thereon to be due and
payable immediately, and upon any such declaration the same shall become and
shall be immediately due and payable, anything in this Indenture or in the Notes
contained to the contrary notwithstanding. If an Event of Default specified in
Section 7.1(d) or (e) occurs, the principal of all the Notes and the interest
accrued thereon shall be immediately and automatically due and payable without
necessity of further action. This provision, however, is subject to the
conditions that if, at any time after the principal of the Notes shall have been
so declared due and payable, and before any judgment or decree for the payment
of the monies due shall have been obtained or entered as hereinafter provided,
the Company shall pay or shall deposit with the Trustee a sum sufficient to pay
all matured installments of interest upon all Notes and the principal of and
premium, if any, on any and all Notes which shall have become due otherwise than
by acceleration (with interest on overdue installments of interest (to the
extent that payment of such interest is enforceable under applicable law) and on
such principal and premium, if any, at the rate borne by the Notes, to the date
of such payment or deposit) and amounts due to the Trustee pursuant to Section
8.6, and if any and all defaults under this Indenture, other than the nonpayment
of principal of and premium, if any, and accrued interest on Notes which shall
have become due by acceleration, shall have been cured or waived pursuant to
Section 7.7 -- then and in every such case the holders of a majority in
aggregate principal amount of the Notes then outstanding, by written notice to
the Company and to the Trustee, may waive all defaults or Events of Default and
rescind and annul such declaration and its consequences; but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or Event of Default, or shall impair any right consequent thereon. The Company
shall notify a Responsible Officer of the Trustee, promptly upon becoming aware
thereof, of any Event of Default.
In case the Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such waiver or rescission and annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such case
the Company, the holders of Notes, and the Trustee shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Company, the holders of Notes, and the Trustee shall
continue as though no such proceeding had been taken.
Section 7.2 PAYMENTS OF NOTES ON DEFAULT; SUIT THEREFOR. The
Company covenants that (a) in case default shall be made in the payment of any
installment of interest upon any of the Notes as and when the same shall become
due and payable, and such default shall have continued for a period of thirty
(30) days, or (b) in case default shall be made in the
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payment of the principal of or premium, if any, on any of the Notes as and when
the same shall have become due and payable, whether at maturity of the Notes or
in connection with any redemption, by or under this Indenture declaration or
otherwise -- then, upon demand of the Trustee, the Company will pay to the
Trustee, for the benefit of the holders of the Notes, the whole amount that then
shall have become due and payable on all such Notes for principal and premium,
if any, or interest, or both, as the case may be, with interest upon the overdue
principal and premium, if any, and (to the extent that payment of such interest
is enforceable under applicable law) upon the overdue installments of interest
at the rate borne by the Notes; and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
any expenses or liabilities incurred by the Trustee hereunder other than through
its negligence or bad faith. Until such demand by the Trustee, the Company may
pay the principal of and premium, if any, and interest on the Notes to the
registered holders, whether or not the Notes are overdue.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the Notes
and collect in the manner provided by law out of the property of the Company or
any other obligor on the Notes wherever situated the monies adjudged or decreed
to be payable.
In the case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Company or any other obligor on the Notes under
Title 11 of the United States Code, or any other applicable law, or in case a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Company or such other obligor, the property of the Company or
such other obligor, or in the case of any other judicial proceedings relative to
the Company or such other obligor upon the Notes, or to the creditors or
property of the Company or such other obligor, the Trustee, irrespective of
whether the principal of the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section 7.2, shall
be entitled and empowered, by intervention in such proceedings or otherwise, to
file and prove a claim or claims for the whole amount of principal, premium, if
any, and interest owing and unpaid in respect of the Notes, and, in case of any
judicial proceedings, to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee and
of the Noteholders allowed in such judicial proceedings relative to the Company
or any other obligor on the Notes, its or their creditors, or its or their
property, and to collect and receive any monies or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of any amounts due the Trustee under Section 8.6; and any receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, custodian or similar
official is hereby authorized by each of the Noteholders to make such payments
to the Trustee, and, in the event that the Trustee shall consent to the making
of such payments directly to the Noteholders, to pay to the Trustee any amount
due it for reasonable compensation, expenses,
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advances and disbursements, including counsel fees incurred by it up to the date
of such distribution. To the extent that such payment of reasonable
compensation, expenses, advances and disbursements out of the estate in any such
proceedings shall be denied for any reason, payment of the same shall be secured
by a lien on, and shall be paid out of, any and all distributions, dividends,
monies, securities and other property which the holders of the Notes may be
entitled to receive in such proceedings, whether in liquidation or under any
plan of reorganization or arrangement or otherwise.
All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Trustee without the possession of
any of the Notes, or the production thereof at any trial or other proceeding
relative thereto, and any such suit or proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the holders of the Notes.
In any proceedings brought by the Trustee (and in any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Notes, and it shall not be necessary to make any holders of the Notes
parties to any such proceedings.
Section 7.3 APPLICATION OF MONIES COLLECTED BY TRUSTEE. Any monies
collected by the Trustee pursuant to this Article VII shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Notes, and stamping thereon the
payment, if only partially paid, and upon surrender thereof, if fully paid:
First: To the payment of all amounts due the Trustee under Section
8.6;
Second: Subject to the provisions of Article IV, in case the
principal of the outstanding Notes shall not have become due and be unpaid, to
the payment of interest on the Notes in default in the order of the maturity of
the installments of such interest, with interest (to the extent that such
interest has been collected by the Trustee) upon the overdue installments of
interest at the rate borne by the Notes, such payments to be made ratably to the
persons entitled thereto;
Third: Subject to the provisions of Article IV, in case the principal
of the outstanding Notes shall have become due, by declaration or otherwise, and
be unpaid to the payment of the whole amount then owing and unpaid upon the
Notes for principal and premium, if any, and interest, with interest on the
overdue principal and premium, if any, and (to the extent that such interest has
been collected by the Trustee) upon overdue installments of interest at the rate
borne by the Notes; and in case such monies shall be insufficient to pay in full
the whole amounts so due and unpaid upon the Notes, then to the payment of such
principal and premium, if any, and interest without preference or priority of
principal and premium, if any, over interest, or of interest over principal and
premium, if any, or of any installment of interest over any other
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installment of interest, or of any Note over any other Note, ratably to the
aggregate of such principal and premium, if any, and accrued and unpaid
interest; and
Fourth: Subject to the provisions of Article IV, to the payment of
the remainder, if any, to the Company or any other person lawfully entitled
thereto.
Section 7.4 PROCEEDINGS BY NOTEHOLDER. No holder of any Note shall
have any right by virtue of or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture, or for the appointment of a receiver, trustee,
liquidator, custodian or other similar official, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof, as hereinbefore
provided, and unless also the holders of not less than 25 percent in aggregate
principal amount of the Notes then outstanding shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee for sixty (60) days after its
receipt of such notice, request and offer of indemnity, shall have neglected or
refused to institute any such action, suit or proceeding and no direction
inconsistent with such written request shall have been given to the Trustee
pursuant to Section 7.7; it being understood and intended, and being expressly
covenanted by the taker and holder of every Note with every other taker and
holder and the Trustee, that no one or more holders of Notes shall have any
right in any manner whatever by virtue of or by availing of any provision of
this Indenture to affect, disturb or prejudice the rights of any other holder of
Notes, or to obtain or seek to obtain priority over or preference to any other
such holder, or to enforce any right under this Indenture, except in the manner
herein provided and for the equal, ratable and common benefit of all holders of
Notes (except as otherwise provided herein). For the protection and enforcement
of this Section 7.4, each and every Noteholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.
Notwithstanding any other provision of this Indenture and any
provision of any Note, the right of any holder of any Note to receive payment of
the principal of and premium, if any, and interest on such Note, on or after the
respective due dates expressed in such Note, or to institute suit for the
enforcement of any such payment on or after such respective dates against the
Company shall not be impaired or affected without the consent of such holder.
Anything in this Indenture or the Notes to the contrary
notwithstanding, the holder of any Note, without the consent of either the
Trustee or the holder of any other Note, in his own behalf and for his own
benefit, may enforce, and may institute and maintain any proceeding suitable to
enforce, his rights of conversion as provided herein.
Section 7.5 PROCEEDINGS BY TRUSTEE. In case of an Event of Default
the Trustee may in its discretion proceed to protect and enforce the rights
vested in it by this Indenture by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any of such rights,
either by suit in equity or by action at law or by proceeding in bankruptcy or
otherwise, whether for the specific enforcement of any covenant or
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agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
Section 7.6 REMEDIES CUMULATIVE AND CONTINUING. Except as provided
in Section 2.6, all powers and remedies given by this Article VII to the Trustee
or to the Noteholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any thereof or of any other powers and remedies
available to the Trustee or the holders of the Notes, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture, and no delay or omission of the Trustee
or of any holder of any of the Notes to exercise any right or power accruing
upon any default or Event of Default occurring and continuing as aforesaid shall
impair any such right or power, or shall be construed to be a waiver of any such
default or any acquiescence therein; and, subject to the provisions of Section
7.4, every power and remedy given by this Article VII or by law to the Trustee
or to the Noteholders may be exercised from time to time, and as often as shall
be deemed expedient, by the Trustee or by the Noteholders.
Section 7.7 DIRECTION OF PROCEEDINGS AND WAIVER OF DEFAULTS BY
MAJORITY OF NOTEHOLDERS. The holders of a majority in aggregate principal
amount of the Notes at the time outstanding determined in accordance with
Section 9.4 shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee; provided, however, that (a) such
direction shall not be in conflict with any rule of law or with this Indenture,
and (b) the Trustee may take any other action deemed proper by the Trustee which
is not inconsistent with such direction. The holders of a majority in aggregate
principal amount of the Notes at the time outstanding determined in accordance
with Section 9.4 may on behalf of the holders of all of the Notes waive any past
default or Event of Default hereunder and its consequences except (i) a default
in the payment of interest or premium, if any, on, or the principal of, the
Notes, (ii) a failure by the Company to convert any Notes into Common Stock,
(iii) a default in the payment of redemption price pursuant to Article III or
(iv) a default in respect of a covenant or provisions hereof which under Article
XI cannot be modified or amended without the consent of the holders of all Notes
then outstanding. Upon any such waiver the Company, the Trustee and the holders
of the Notes shall be restored to their former positions and rights hereunder;
but no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon. Whenever any default or Event
of Default hereunder shall have been waived as permitted by this Section 7.7,
said default or Event of Default shall for all purposes of the Notes and this
Indenture be deemed to have been cured and to be not continuing; but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon.
Section 7.8 NOTICE OF DEFAULTS. The Trustee shall, within ninety
(90) days after a Responsible Officer of the Trustee has knowledge of the
occurrence of a default, mail to all Noteholders, as the names and addresses of
such holders appear upon the Note register, notice of all defaults known to a
Responsible Officer, unless such defaults shall have been cured or waived before
the giving of such notice; and PROVIDED that, except in the case of default in
the
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payment of the principal of, or premium, if any, or interest on any of the
Notes, the Trustee shall be protected in withholding such notice if and so long
as a trust committee of directors and/or Responsible Officers of the Trustee in
good faith determine that the withholding of such notice is in the interests of
the Noteholders.
Section 7.9 UNDERTAKING TO PAY COSTS. All parties to this
Indenture agree, and each holder of any Note by his acceptance thereof shall be
deemed to have agreed, that any court may, in its discretion, require, in any
suit for the enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; PROVIDED that the provisions of this Section 7.9 (to the
extent permitted by law) shall not apply to any suit instituted by the Trustee,
to any suit instituted by any Noteholder, or group of Noteholders, holding in
the aggregate more than ten percent in principal amount of the Notes at the time
outstanding determined in accordance with Section 9.4, or to any suit instituted
by any Noteholder for the enforcement of the payment of the principal of or
premium, if any, or interest on any Note on or after the due date expressed in
such Note or to any suit for the enforcement of the right to convert any Note in
accordance with the provisions of Article XV.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.1 DUTIES AND RESPONSIBILITIES OF TRUSTEE. The Trustee,
prior to the occurrence of an Event of Default and after the curing of all
Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture. In case an
Event of Default has occurred (which has not been cured or waived) the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default and
after the curing or waiving of all Events of Default which may have occurred:
(1) the duties and obligations of the Trustee
shall be determined solely by the express provisions of this Indenture and the
Trust Indenture Act, and the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in this
Indenture and no implied covenants or obligations shall be read into this
Indenture and the Trust Indenture Act against the Trustee; and
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(2) in the absence of bad faith and willful
misconduct on the part of the Trustee, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but, in the case of any such
certificates or opinions which by any provisions hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Indenture;
(b) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Officers of the Trustee,
unless the Trustee was negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance with
the written direction of the holders of not less than a majority in principal
amount of the Notes at the time outstanding determined as provided in Section
9.4 relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Indenture;
(d) whether or not therein provided, every provision
of this Indenture relating to the conduct or affecting the liability of, or
affording protection to, the Trustee shall be subject to the provisions of this
Section;
(e) the Trustee shall not be liable in respect of any
payment (as to the correctness of amount, entitlement to receive or any other
matters relating to payment) or notice effected by the Company or any paying
agent or any records maintained by any co-registrar with respect to the Notes;
(f) if any party fails to deliver a notice relating to
an event the fact of which, pursuant to this Indenture, requires notice to be
sent to the Trustee, the Trustee may conclusively rely on its failure to receive
such notice as reason to act as if no such event occurred;
(g) the Trustee may consult with counsel and any
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or omitted by it hereunder in good
faith and in accordance with such advice or Opinion of Counsel;
(h) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture at the
request, order or direction of any of the Noteholders pursuant to the provisions
of this Indenture, unless such Noteholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; and
(i) the Trustee shall not be deemed to have notice of
any Default or Event of Default unless a Responsible Officer of the Trustee has
actual knowledge
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thereof or unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office of the Trustee, and such
notice references the Notes and this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
Section 8.2 RELIANCE ON DOCUMENTS, OPINIONS, ETC. Except as
otherwise provided in Section 8.1:
(a) the Trustee may rely and shall be protected in
acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, debenture, note, coupon or other paper or
document believed by it in good faith to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request, direction, order or demand of the
Company mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein specifically
prescribed); and any resolution of the Board of Directors may be evidenced to
the Trustee by a copy thereof certified by the Secretary or an Assistant
Secretary of the Company;
(c) the Trustee may consult with counsel and any
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or omitted by it hereunder in good
faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture at the
request, order or direction of any of the Noteholders pursuant to the provisions
of this Indenture, unless such Noteholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby;
(e) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney; and
(f) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys
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and the Trustee shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed by it with due care hereunder.
Section 8.3 NO RESPONSIBILITY FOR RECITALS, ETC. The recitals
contained herein and in the Notes (except in the Trustee's certificate of
authentication) shall be taken as the statements of the Company, and the Trustee
assumes no responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered by
the Trustee in conformity with the provisions of this Indenture.
Section 8.4 TRUSTEE, PAYING AGENTS, CONVERSION AGENTS OR REGISTRAR
MAY OWN NOTES. The Trustee, any paying agent, any conversion agent or Note
registrar, in its individual or any other capacity, may become the owner or
pledgee of Notes with the same rights it would have if it were not Trustee,
paying agent, conversion agent or Note registrar.
Section 8.5 MONIES TO BE HELD IN TRUST. Subject to the provisions
of Section 13.4 and Section 4.2, all monies received by the Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received. Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as may be agreed from time to time by the Company and the Trustee.
Section 8.6 COMPENSATION AND EXPENSES OF TRUSTEE. The Company
covenants and agrees to pay to the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation for all services rendered by it
hereunder in any capacity (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust) as mutually agreed
to in writing between the Company and the Trustee, and the Company will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances reasonably incurred or made by the Trustee in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence, willful misconduct, recklessness or
bad faith. The Company also covenants to indemnify the Trustee in any capacity
under this Indenture and its agents and any authenticating agent for, and to
hold them harmless against, any loss, liability or expense incurred without
negligence, willful misconduct, recklessness, or bad faith on the part of the
Trustee or such agent or authenticating agent, as the case may be, and arising
out of or in connection with the acceptance or administration of this trust or
in any other capacity hereunder, including the costs and expenses of defending
themselves against any claim of liability in the premises. The obligations of
the Company under this Section 8.6 to compensate or indemnify the Trustee and to
pay or reimburse the Trustee for expenses, disbursements and advances shall be
secured by a lien prior to that of the Notes upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the benefit of
the holders of particular Notes. The obligation of the Company under this
Section shall survive the satisfaction and discharge of this Indenture.
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When the Trustee and its agents and any authenticating agent incur
expenses or render services after an Event of Default specified in Section
7.1(d) or (e) occurs, the expenses and the compensation for the services are
intended to constitute expenses of administration under any bankruptcy,
insolvency or similar laws.
Section 8.7 OFFICERS' CERTIFICATE AS EVIDENCE. Except as otherwise
provided in Section 8.1, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence, willful misconduct, recklessness,
or bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate delivered to the Trustee.
Section 8.8 CONFLICTING INTERESTS OF TRUSTEE. If the Trustee has
or shall acquire a conflicting interest within the meaning of the Trust
Indenture Act, the Trustee shall either eliminate such interest or resign, to
the extent and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Indenture.
Section 8.9 ELIGIBILITY OF TRUSTEE. There shall at all times be a
Trustee hereunder which shall be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000. If such person publishes reports of condition at least annually,
pursuant to law or to the requirements of any supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 8.10 RESIGNATION OR REMOVAL OF TRUSTEE.
(a) The Trustee may at any time resign by giving
written notice of such resignation to the Company and to the holders of Notes.
Upon receiving such notice of resignation, the Company shall promptly appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor trustee. If no successor
trustee shall have been so appointed and have accepted appointment sixty (60)
days after the mailing of such notice of resignation to the Noteholders, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee, or any Noteholder who has been a bona fide
holder of a Note or Notes for at least six months may, subject to the provisions
of Section 7.9, on behalf of himself and all others similarly situated, petition
any such court for the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(b) In case at any time any of the following shall
occur:
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(1) the Trustee shall fail to comply with Section
8.8 after written request therefor by the Company or by any Noteholder who has
been a bona fide holder of a Note or Notes for at least six months; or
(2) the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.9 and shall fail to resign after
written request therefor by the Company or by any such Noteholder; or
(3) the Trustee shall become incapable of acting,
or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, subject to the
provisions of Section 7.9, any Noteholder who has been a bona fide holder of a
Note or Notes for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor trustee; provided that if no
successor Trustee shall have been appointed and have accepted appointment sixty
(60) days after either the Company or the Noteholders has removed the Trustee,
the Trustee so removed may petition any court of competent jurisdiction for an
appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, remove the Trustee and
appoint a successor trustee.
(c) The holders of a majority in aggregate principal
amount of the Notes at the time outstanding may at any time remove the Trustee
and nominate a successor trustee which shall be deemed appointed as successor
trustee unless within ten (10) days after notice to the Company of such
nomination the Company objects thereto, in which case the Trustee so removed or
any Noteholder, upon the terms and conditions and otherwise as in Section
8.10(a) provided, may petition any court of competent jurisdiction for an
appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and
appointment of a successor trustee pursuant to any of the provisions of this
Section 8.10 shall become effective upon acceptance of appointment by the
successor trustee as provided in Section 8.11.
Section 8.11 ACCEPTANCE BY SUCCESSOR TRUSTEE. Any successor trustee
appointed as provided in Section 8.10 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Company or of the successor trustee, the trustee ceasing to act shall,
upon payment of any amounts then due it
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pursuant to the provisions of Section 8.6, execute and deliver an instrument
transferring to such successor trustee all the rights and powers of the trustee
so ceasing to act. Upon request of any such successor trustee, the Company
shall execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor trustee all such rights and powers.
Any trustee ceasing to act shall, nevertheless, retain a lien upon all property
and funds held or collected by such trustee as such, except for funds held in
trust for the benefit of holders of particular Notes, to secure any amounts then
due it pursuant to the provisions of Section 8.6.
No successor trustee shall accept appointment as provided in this
Section 8.11 unless at the time of such acceptance such successor trustee shall
be qualified under the provisions of Section 8.8 and be eligible under the
provisions of Section 8.9.
Upon acceptance of appointment by a successor trustee as provided in
this Section 8.11, the Company (or the former trustee, at the written direction
of the Company) shall mail or cause to be mailed notice of the succession of
such trustee hereunder to the holders of Notes at their addresses as they shall
appear on the Note register. If the Company fails to mail such notice within
ten (10) days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Company.
Section 8.12 SUCCESSION BY MERGER, ETC. Any corporation into which
the Trustee may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee (including any
trust created by this Indenture), shall be the successor to the Trustee
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that in the case of any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee such corporation shall be qualified under the provisions of Section 8.8
and eligible under the provisions of Section 8.9.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture, any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee or authenticating agent appointed
by such predecessor trustee, and deliver such Notes so authenticated; and in
case at that time any of the Notes shall not have been authenticated, any
successor to the Trustee or an authenticating agent appointed by such successor
trustee may authenticate such Notes either in the name of any predecessor
trustee hereunder or in the name of the successor trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have;
PROVIDED, HOWEVER, that the right to adopt the certificate of authentication of
any predecessor Trustee or authenticate Notes in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.
Section 8.13 PREFERENTIAL COLLECTION OF CLAIMS. If and when the
Trustee shall be or become a creditor of the Company (or any other obligor upon
the Notes), the Trustee shall
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be subject to the provisions of the Trust Indenture Act regarding the collection
of the claims against the Company (or any such other obligor).
Section 8.14 TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE
COMPANY. Any application by the Trustee for written instructions from the
Company (other than with regard to any action proposed to be taken or omitted to
be taken by the Trustee that affects the rights of the holders of the Notes or
holders of Senior Indebtedness under this Indenture, including, without
limitation, under Article IV hereof) may, at the option of the Trustee, set
forth in writing any action proposed to be taken or omitted by the Trustee under
this Indenture and the date on and/or after which such action shall be taken or
such omission shall be effective. The Trustee shall not be liable for any
action taken by, or omission of, the Trustee in accordance with a proposal
included in such application on or after the date specified in such application
(which date shall not be less than three Business Days after the date any
officer of the Company actually receives such application, unless any such
officer shall have consented in writing to any earlier date) unless prior to
taking any such action (or the effective date in the case of an omission), the
Trustee shall have received written instructions in response to such application
specifying the action to be taken or omitted.
ARTICLE IX
CONCERNING THE NOTEHOLDERS
Section 9.1 ACTION BY NOTEHOLDERS. Whenever in this Indenture it
is provided that the holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action, the holders of
such specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by Noteholders
in person or by agent or proxy appointed in writing, or (b) by the record of the
holders of Notes voting in favor thereof at any meeting of Noteholders duly
called and held in accordance with the provisions of Article X, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of Noteholders. Whenever the Company or the Trustee solicits the taking
of any action by the holders of the Notes, the Company or the Trustee may fix in
advance of such solicitation, a date as the record date for determining holders
entitled to take such action. The record date shall be not more than fifteen
(15) days prior to the date of commencement of solicitation of such action.
Section 9.2 PROOF OF EXECUTION BY NOTEHOLDERS. Subject to the
provisions of Sections 8.1, 8.2 and 10.5, proof of the execution of any
instrument by a Noteholder or his agent or proxy shall be sufficient if made in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
holding of Notes shall be proved by the registry of such Notes or by a
certificate of the Note registrar.
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The record of any Noteholders' meeting shall be proved in the manner
provided in Section 10.6.
Section 9.3 WHO ARE DEEMED ABSOLUTE OWNERS. The Company, the
Trustee, any paying agent, any conversion agent and any Note registrar may deem
the person in whose name such Note shall be registered upon the Note register to
be, and may treat him as, the absolute owner of such Note (whether or not such
Note shall be overdue and notwithstanding any notation of ownership or other
writing thereon) for the purpose of receiving payment of or on account of the
principal of, premium, if any, and interest on such Note, for conversion of such
Note and for all other purposes; and neither the Company nor the Trustee nor any
paying agent nor any conversion agent nor any Note registrar shall be affected
by any notice to the contrary. All such payments so made to any holder for the
time being, or upon his order, shall be valid, and, to the extent of the sum or
sums so paid, effectual to satisfy and discharge the liability for monies
payable upon any such Note.
Section 9.4 COMPANY-OWNED NOTES DISREGARDED. In determining
whether the holders of the requisite aggregate principal amount of Notes have
concurred in any direction, consent, waiver or other action under this
Indenture, Notes which are owned by the Company or any other obligor on the
Notes or any Affiliate of the Company or any other obligor on the Notes shall be
disregarded and deemed not to be outstanding for the purpose of any such
determination; PROVIDED that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, consent, waiver or other
action only Notes which a Responsible Officer knows are so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 9.4 if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's right to vote
such Notes and that the pledgee is not the Company, any other obligor on the
Notes or any Affiliate of the Company or any such other obligor. In the case of
a dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee. Upon request of the Trustee,
the Company shall furnish to the Trustee promptly an Officers' Certificate
listing and identifying all Notes, if any, known by the Company to be owned or
held by or for the account of any of the above described persons; and, subject
to Section 8.1, the Trustee shall be entitled to accept such Officers'
Certificate as conclusive evidence of the facts therein set forth and of the
fact that all Notes not listed therein are outstanding for the purpose of any
such determination.
Section 9.5 REVOCATION OF CONSENTS; FUTURE HOLDERS BOUND. At any
time prior to (but not after) the evidencing to the Trustee, as provided in
Section 9.1, of the taking of any action by the holders of the percentage in
aggregate principal amount of the Notes specified in this Indenture in
connection with such action, any holder of a Note which is shown by the evidence
to be included in the Notes the holders of which have consented to such action
may, by filing written notice with the Trustee at its Corporate Trust Office and
upon proof of holding as provided in Section 9.2, revoke such action so far as
concerns such Note. Except as aforesaid, any such action taken by the holder of
any Note shall be conclusive and binding upon such holder and upon all future
holders and owners of such Note and of any Notes issued in exchange or
substitution therefor, irrespective of whether any notation in regard thereto is
made upon such Note or any Note issued in exchange or substitution therefor.
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ARTICLE X
NOTEHOLDERS' MEETINGS
Section 10.1 PURPOSE OF MEETINGS. A meeting of Noteholders may be
called at any time and from time to time pursuant to the provisions of this
Article X for any of the following purposes:
(1) to give any notice to the Company or to the
Trustee or to give any directions to the Trustee permitted under this Indenture,
or to consent to the waiving of any default or Event of Default hereunder and
its consequences, or to take any other action authorized to be taken by
Noteholders pursuant to any of the provisions of Article VII;
(2) (to remove the Trustee and nominate a
successor trustee pursuant to the provisions of Article VIII;
(3) to consent to the execution of an indenture
or indentures supplemental hereto pursuant to the provisions of Section 11.2; or
(4) to take any other action authorized to be
taken by or on behalf of the holders of any specified aggregate principal amount
of the Notes under any other provision of this Indenture or under applicable
law.
Section 10.2 CALL OF MEETINGS BY TRUSTEE. The Trustee may at any
time call a meeting of Noteholders to take any action specified in Section 10.1,
to be held at such time and at such place as the Trustee shall determine.
Notice of every meeting of the Noteholders, setting forth the time and the place
of such meeting and in general terms the action proposed to be taken at such
meeting and the establishment of any record date pursuant to Section 9.1, shall
be mailed to holders of Notes at their addresses as they shall appear on the
Note register. Such notice shall also be mailed to the Company. Such notices
shall be mailed not less than twenty (20) nor more than ninety (90) days prior
to the date fixed for the meeting.
Any meeting of Noteholders shall be valid without notice if the
holders of all Notes then outstanding are present in person or by proxy or if
notice is waived before or after the meeting by the holders of all Notes
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.
Section 10.3 CALL OF MEETINGS BY COMPANY OR NOTEHOLDERS. In case at
any time the Company, pursuant to a resolution of its Board of Directors, or the
holders of at least ten percent in aggregate principal amount of the Notes then
outstanding, shall have requested the Trustee to call a meeting of Noteholders,
by written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed the notice of such
meeting within twenty (20) days after receipt of such request, then the Company
or such Noteholders may determine the time and the place for such meeting and
may call such meeting to take any action authorized in Section 10.1, by mailing
notice thereof as provided in Section 10.2.
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Section 10.4 QUALIFICATIONS FOR VOTING. To be entitled to vote at
any meeting of Noteholders a person shall (a) be a holder of one or more Notes
on the record date pertaining to such meeting or (b) be a person appointed by an
instrument in writing as proxy by a holder of one or more Notes. The only
persons who shall be entitled to be present or to speak at any meeting of
Noteholders shall be the persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
Section 10.5 RELATIONS. Notwithstanding any other provisions of
this Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of
Notes and of the appointment of proxies, and in regard to the appointment and
duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 10.3, in which case the Company
or the Noteholders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the holders of a majority in principal
amount of the Notes represented at the meeting and entitled to vote at the
meeting.
Subject to the provisions of Section 9.4, at any meeting each
Noteholder or proxyholder shall be entitled to one vote for each $1,000
principal amount of Notes held or represented by him; PROVIDED, HOWEVER, that no
vote shall be cast or counted at any meeting in respect of any Note challenged
as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Notes held by him or instruments in writing as aforesaid duly
designating him as the proxy to vote on behalf of other Noteholders. Any
meeting of Noteholders duly called pursuant to the provisions of Section 10.2 or
10.3 may be adjourned from time to time by the holders of a majority of the
aggregate principal amount of Notes represented at the meeting, whether or not
constituting a quorum, and the meeting may be held as so adjourned without
further notice.
Section 10.6 VOTING. The vote upon any resolution submitted to any
meeting of Noteholders shall be by written ballot on which shall be subscribed
the signatures of the holders of Notes or of their representatives by proxy and
the principal amount of the Notes held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Noteholders shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was mailed as provided in
Section 10.2. The record shall show the principal amount of the Notes voting in
favor of or against any resolution. The
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record shall be signed and verified by the affidavits of the permanent chairman
and secretary of the meeting and one of the duplicates shall be delivered to the
Company and the other to the Trustee to be preserved by the Trustee, the latter
to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 10.7 NO DELAY OF RIGHTS BY MEETING. Nothing in this Article
X contained shall be deemed or construed to authorize or permit, by reason of
any call of a meeting of Noteholders or any rights expressly or impliedly
conferred hereunder to make such call, any hindrance or delay in the exercise of
any right or rights conferred upon or reserved to the Trustee or to the
Noteholders under any of the provisions of this Indenture or of the Notes.
ARTICLE XI
SUPPLEMENTAL INDENTURES
Section 11.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
The Company, when authorized by the resolutions of the Board of Directors, and
the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) to make provision with respect to the conversion
rights of the holders of Notes pursuant to the requirements of Section 15.6 and
the redemption obligations of the Company pursuant to the requirements of
Section 3.5(e);
(b) subject to Article IV, to convey, transfer,
assign, mortgage or pledge to the Trustee as security for the Notes, any
property or assets;
(c) to evidence the succession of another corporation
to the Company, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company pursuant
to Article XII;
(d) to add to the covenants of the Company such
further covenants, restrictions or conditions as the Board of Directors and the
Trustee shall consider to be for the benefit of the holders of Notes, and to
make the occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions or conditions a default or an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; PROVIDED, HOWEVER, that in
respect of any such additional covenant, restriction or condition such
supplemental indenture may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate enforcement upon such default or
may limit the remedies available to the Trustee upon such default;
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(e) to provide for the issuance under this Indenture
of Notes in coupon form (including Notes registrable as to principal only) and
to provide for exchangeability of such Notes with the Notes issued hereunder in
fully registered form and to make all appropriate changes for such purpose;
(f) to cure any ambiguity or to correct or supplement
any provision contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to matters or
questions arising under this Indenture which shall not materially adversely
affect the interests of the holders of the Notes;
(g) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the Notes; or
(h) to modify, eliminate or add to the provisions of
this Indenture to such extent as shall be necessary to effect the qualifications
of this Indenture under the Trust Indenture Act, or under any similar federal
statute hereafter enacted.
Upon the written request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any supplemental indenture, the Trustee
is hereby authorized to join with the Company in the execution of any such
supplemental indenture, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the conveyance,
transfer and assignment of any property thereunder, but the Trustee shall not be
obligated to, but may in its discretion, enter into any supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section 11.1 may be executed by the Company and the Trustee without the consent
of the holders of any of the Notes at the time outstanding, notwithstanding any
of the provisions of Section 11.2.
Section 11.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS.
With the consent (evidenced as provided in Article IX) of the holders of not
less than a majority in aggregate principal amount of the Notes at the time
outstanding, the Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or any supplemental indenture or of modifying in any manner the
rights of the holders of the Notes; PROVIDED, HOWEVER, that no such supplemental
indenture shall (i) extend the fixed maturity of any Note, or reduce the rate or
extend the time of payment of interest thereon, or reduce the principal amount
thereof or premium, if any, thereon, or reduce any amount payable on redemption
thereof, or impair the right of any Noteholder to institute suit for the payment
thereof, or make the principal thereof or interest or premium, if any, thereon
payable in any coin or currency other than that provided in the Notes, or modify
the provisions of this Indenture with respect to the subordination of the Notes
in a manner adverse to the Noteholders in any material respect, or
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change the obligation of the Company to redeem any Note upon the happening of a
Fundamental Change in a manner adverse to the holder of Notes, or impair the
right to convert the Notes into Common Stock subject to the terms set forth
herein, including Section 15.6, without the consent of the holder of each Note
so affected, or (ii) reduce the aforesaid percentage of Notes, the holders of
which are required to consent to any such supplemental indenture, without the
consent of the holders of all Notes then outstanding.
Upon the written request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any such supplemental indenture, and upon
the filing with the Trustee of evidence of the consent of Noteholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in is discretion, but shall not be obligated to, enter into
such supplemental indenture.
It shall not be necessary for the consent of the Noteholders under
this Section 11.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Section 11.3 EFFECT OF SUPPLEMENTAL INDENTURE. Any supplemental
indenture executed pursuant to the provisions of this Article XI shall comply
with the Trust Indenture Act, as then in effect; PROVIDED that this Section 11.3
shall not require such supplemental indenture or the Trustee to be qualified
under the Trust Indenture Act prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act or the Indenture has been
qualified under the Trust Indenture Act, nor shall it constitute any admission
or acknowledgment by any party to such supplemental indenture that any such
qualification is required prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act or the Indenture has been
qualified under the Trust Indenture Act. Upon the execution of any supplemental
indenture pursuant to the provisions of this Article XI, this Indenture shall be
and be deemed to be modified and amended in accordance therewith and the
respective rights, limitation of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the holders of Notes shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
Section 11.4 NOTATION ON NOTES. Notes authenticated and delivered
after the execution of any supplemental indenture pursuant to the provisions of
this Article XI may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may, at the Company's expense, be
prepared and executed by the Company, authenticated by the Trustee (or an
authenticating agent duly appointed by the Trustee pursuant to Section 16.11)
and delivered in exchange for the Notes then outstanding, upon surrender of such
Notes then outstanding.
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Section 11.5 Evidence of Compliance of Supplemental Indenture to Be
Furnished Trustee. Prior to entering into any supplemental indenture, the
Trustee may request an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article XI.
ARTICLE XII
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 12.1 COMPANY MAY CONSOLIDATE ETC. ON CERTAIN TERMS. Subject
to the provisions of Section 12.2, nothing contained in this Indenture or in any
of the Notes shall prevent any consolidation or merger of the Company with or
into any other corporation or corporations (whether or not affiliated with the
Company), or successive consolidations or mergers in which the Company or its
successor or successors shall be a party or parties, or shall prevent any sale,
conveyance or lease (or successive sales, conveyances or leases) of all or
substantially all of the property of the Company, to any other corporation
(whether or not affiliated with the Company), authorized to acquire and operate
the same and which shall be organized under the laws of the United States of
America, any state thereof or the District of Columbia; PROVIDED, that upon any
such consolidation, merger, sale, conveyance or lease, the due and punctual
payment of the principal of and premium, if any, and interest on all of the
Notes, according to their tenor, and the due and punctual performance and
observance of all of the covenants and conditions of this Indenture to be
performed by the Company, shall be expressly assumed, by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee by
the corporation (if other than the Company) formed by such consolidation, or
into which the Company shall have been merged, or by the corporation which shall
have acquired or leased such property, and such supplemental indenture shall
provide for the applicable conversion rights set forth in Section 15.6.
Section 12.2 SUCCESSOR CORPORATION TO BE SUBSTITUTED. In case of
any such consolidation, merger, sale, conveyance or lease and upon the
assumption by the successor corporation, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the due and
punctual payment of the principal of and premium, if any, and interest on all of
the Notes and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Company, such successor
corporation shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as the party of the first part. Such
successor corporation thereupon may cause to be signed, and may issue either in
its own name or in the name of Heartport, Inc. any or all of the Notes issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such successor corporation
instead of the Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee shall authenticate and shall deliver,
or cause to be authenticated and delivered, any Notes which previously shall
have been signed and delivered by the officers of the Company to the Trustee for
authentication, and any Notes which such successor corporation thereafter shall
cause to be signed and delivered to the Trustee for that purpose. All the Notes
so issued shall in all
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respects have the same legal rank and benefit under this Indenture as the Notes
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all of such Notes had been issued at the date of the execution hereof.
In the event of any such consolidation, merger, sale, conveyance or lease, the
person named as the "Company" in the first paragraph of this Indenture or any
successor which shall thereafter have become such in the manner prescribed in
this Article XII may be dissolved, wound up and liquidated at any time
thereafter and such person shall be released from its liabilities as obligor and
maker of the Notes and from its obligations under this Indenture.
In case of any such consolidation, merger, sale, conveyance or lease,
such changes in phraseology and form (but not in substance) may be made in the
Notes thereafter to be issued as may be appropriate.
Section 12.3 OPINION OF COUNSEL TO BE GIVEN TRUSTEE. The Trustee
shall receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such consolidation, merger, sale, conveyance or lease and any
such assumption complies with the provisions of this Article XII.
ARTICLE XIII
SATISFACTION AND DISCHARGE OF INDENTURE
Section 13.1 DISCHARGE OF INDENTURE. When (a) the Company shall
deliver to the Trustee for cancellation all Notes theretofore authenticated
(other than any Notes which have been destroyed, lost or stolen and in lieu of
or in substitution for which other Notes shall have been authenticated and
delivered) and not theretofore canceled, or (b) all the Notes not theretofore
canceled or delivered to the Trustee for cancellation shall have become due and
payable, or are by their terms to become due and payable within one year or are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption, and the Company shall
deposit with the Trustee, in trust, funds sufficient to pay at maturity or upon
redemption of all of the Notes (other than any Notes which shall have been
mutilated, destroyed, lost or stolen and in lieu of or in substitution for which
other Notes shall have been authenticated and delivered) not theretofore
canceled or delivered to the Trustee for cancellation, including principal and
premium, if any, and interest due or to become due to such date of maturity or
redemption date, as the case may be, accompanied by a verification report, as to
the sufficiency of the deposited amount, from an independent certified
accountant or other financial professional satisfactory to the Trustee, and if
the Company shall also pay or cause to be paid all other sums payable hereunder
by the Company, then this Indenture shall cease to be of further effect (except
as to (i) remaining rights of registration of transfer, substitution and
exchange and conversion of Notes, (ii) rights hereunder of Noteholders to
receive payments of principal of and premium, if any, and interest on, the Notes
and the other rights, duties and obligations of Noteholders, as beneficiaries
hereof with respect to the amounts, if any, so deposited with the Trustee and
(iii) the rights, obligations and immunities of the Trustee hereunder), and the
Trustee, on written demand of the Company accompanied by an
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Officers' Certificate and an Opinion of Counsel as required by Section 16.5 and
at the cost and expense of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture; the Company,
however, hereby agreeing to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred by the Trustee and to compensate the
Trustee for any services thereafter reasonably and properly rendered by the
Trustee in connection with this Indenture or the Notes.
Section 13.2 DEPOSITED MONIES TO BE HELD IN TRUST BY TRUSTEE.
Subject to Section 13.4, all monies deposited with the Trustee pursuant to
Section 13.1, provided such deposit was not in violation of Article IV, shall be
held in trust for the sole benefit of the Noteholders and not to be subject to
the subordination provisions of Article IV, and such monies shall be applied by
the Trustee to the payment, either directly or through any paying agent
(including the Company if acting as its own paying agent), to the holders of the
particular Notes for the payment or redemption of which such monies have been
deposited with the Trustee, of all sums due and to become due thereon for
principal and interest and premium, if any.
Section 13.3 PAYING AGENT TO REPAY MONIES HELD. Upon the
satisfaction and discharge of this Indenture, all monies then held by any paying
agent of the Notes (other than the Trustee) shall, upon written request of the
Company, be repaid to it or paid to the Trustee, and thereupon such paying agent
shall be released from all further liability with respect to such monies.
Section 13.4 RETURN OF UNCLAIMED MONIES. Subject to the requirements
of applicable law, any monies deposited with or paid to the Trustee for payment
of the principal of, premium, if any, or interest on Notes and not applied but
remaining unclaimed by the holders of Notes for two years after the date upon
which the principal of, premium, if any, or interest on such Notes, as the case
may be, shall have become due and payable, shall be repaid to the Company by the
Trustee on demand and all liability of the Trustee shall thereupon cease with
respect to such monies; and the holder of any of the Notes shall thereafter look
only to the Company for any payment which such holder may be entitled to collect
unless an applicable abandoned property law designates another Person.
Section 13.5 REINSTATEMENT. If the Trustee or the paying agent is
unable to apply any money in accordance with Section 13.2 by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 13.1 until such time as the Trustee or the paying
agent is permitted to apply all such money in accordance with Section 13.2;
PROVIDED, HOWEVER, that if the Company makes any payment of interest on or
principal of any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the holders of such Notes to
receive such payment from the money held by the Trustee or paying agent.
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ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 14.1 INDENTURE AND NOTES SOLELY CORPORATE OBLIGATIONS. No
recourse for the payment of the principal of or premium, if any, or interest on
any Note, or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
this Indenture or in any supplemental indenture or in any Note, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer, or director or subsidiary,
as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Notes.
ARTICLE XV
CONVERSION OF NOTES
Section 15.1 RIGHT TO CONVERT. Subject to and upon compliance with
the provisions of this Indenture, including without limitation Article IV, the
holder of any Note shall have the right, at his option, at any time prior to the
close of business on May 1, 2004 (except that, with respect to any Note or
portion of a Note which shall be called for redemption, such right shall
terminate, except as provided in Section 15.2 or Section 3.4, at the close of
business on the Business Day next preceding the date fixed for redemption of
such Note or portion of a Note unless the Company shall default in payment due
upon redemption thereof) to convert the principal amount of any such Note, or
any portion of such principal amount which is $1,000 or an integral multiple
thereof, into that number of fully paid and non-assessable shares of Common
Stock (as such shares shall then be constituted) obtained by dividing the
principal amount of the Note or portion thereof surrendered for conversion by
the Conversion Price in effect at such time, by surrender of the Note so to be
converted in whole or in part in the manner provided, together with any required
funds, in Section 15.2. A holder of Notes is not entitled to any rights of a
holder of Common Stock until such holder has converted his Notes to Common
Stock, and only to the extent such Notes are deemed to have been converted to
Common Stock under this Article XV.
Section 15.2 EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON
STOCK ON CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS. In order to
exercise the conversion privilege with respect to any Note in certificated form,
the holder of any such Note to be converted in whole or in part shall surrender
such Note, duly endorsed, at an office or agency maintained by the Company
pursuant to Section 5.2, accompanied by the funds, if any, required by the
penultimate paragraph of this Section 15.2, and shall give written notice of
conversion in the form provided on the Notes (or such other notice which is
acceptable to the Company) to the
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office or agency that the holder elects to convert such Note or the portion
thereof specified in said notice. Such notice shall also state the name or
names (with address or addresses) in which the certificate or certificates for
shares of Common Stock which shall be issuable on such conversion shall be
issued, and shall be accompanied by transfer taxes, if required pursuant to
Section 15.7. Each such Note surrendered for conversion shall, unless the
shares issuable on conversion are to be issued in the same name as the
registration of such Note, be duly endorsed by, or be accompanied by instruments
of transfer in form satisfactory to the Company duly executed by, the holder or
his duly authorized attorney.
In order to exercise the conversion privilege with respect to any
interest in a Note in global form, the holder must complete the appropriate
instruction form for conversion pursuant to the Depository's book-entry
conversion program, deliver by book-entry delivery an interest in such Note in
global form, furnish appropriate endorsements and transfer documents if required
by the Company or the Trustee or conversion agent, and pay the funds, if any,
required by this Section 15.2 and any transfer taxes if required pursuant to
Section 15.7.
As promptly as practicable after satisfaction of the requirements for
conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are to be issued in a name other than
that of the Noteholder (as if such transfer were a transfer of the Note or Notes
(or portion thereof) so converted), the Company shall issue and shall deliver to
such holder at the office or agency maintained by the Company for such purpose
pursuant to Section 5.2, a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such Note or portion
thereof in accordance with the provisions of this Article and a check or cash in
respect of any fractional interest in respect of a share of Common Stock arising
upon such conversion, as provided in Section 15.3. In case any Note of a
denomination greater than $1,000 shall be surrendered for partial conversion,
and subject to Section 2.3, the Company shall execute and the Trustee shall
authenticate and deliver to the holder of the Note so surrendered, without
charge to him, a new Note or Notes in authorized denominations in an aggregate
principal amount equal to the unconverted portion of the surrendered Note.
Each conversion shall be deemed to have been effected as to any such
Note (or portion thereof) on the date on which the requirements set forth above
in this Section 15.2 have been satisfied as to such Note (or portion thereof),
and the person in whose name any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become on said date the holder of record of the shares represented thereby;
PROVIDED, HOWEVER, that any such surrender on any date when the stock transfer
books of the Company shall be closed shall constitute the person in whose name
the certificates are to be issued as the record holder thereof for all purposes
on the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date upon which
such Note shall be surrendered.
Any Note or portion thereof surrendered for conversion during the
period from the close of business on the record date for any interest payment
date to the close of business on the Business Day next preceding the following
interest payment date shall (unless such Note or
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portion thereof being converted shall have been called for redemption on a
redemption date which occurs during the period from the close of business on
such record date to the close of business on the Business Day next preceding the
following interest payment date) be accompanied by payment, in New York Clearing
House funds or other funds acceptable to the Company, of an amount equal to the
interest otherwise payable on such interest payment date on the principal amount
being converted; PROVIDED, HOWEVER, that no such payment need be made if there
shall exist at the time of conversion a default in the payment of interest on
the Notes. Except as provided above in this Section 15.2, no payment or other
adjustment shall be made for interest accrued on any Note converted or for
dividends on any shares issued upon the conversion of such Note as provided in
this Article.
Upon the conversion of an interest in a Note in global form, the
Trustee (or other conversion agent appointed by the Company), or the Custodian
at the direction of the Trustee (or other conversion agent appointed by the
Company), shall make a notation on such Note in global form as to the reduction
in the principal amount represented thereby. The Company shall notify the
Trustee in writing of any conversions of Notes effected through any conversion
agent other than the Trustee.
Section 15.3 CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES. No
fractional shares of Common Stock or scrip representing fractional shares shall
be issued upon conversion of Notes. If more than one Note shall be surrendered
for conversion at one time by the same holder, the number of full shares which
shall be issuable upon conversion shall be computed on the basis of the
aggregate principal amount of the Notes (or specified portions thereof to the
extent permitted hereby) so surrendered. If any fractional share of stock would
be issuable upon the conversion of any Note or Notes, the Company shall make an
adjustment and payment therefor in cash at the current market value thereof to
the holder of Notes. The current market value of a share of Common Stock shall
be the Closing Price on the first Business Day immediately preceding the day on
which the Notes (or specified portions thereof) are deemed to have been
converted.
Section 15.4 CONVERSION PRICE. The conversion price shall be as
specified in the form of Note (herein called the "Conversion Price") attached as
Exhibit A hereto, subject to adjustment as provided in this Article XV.
Section 15.5 ADJUSTMENT OF CONVERSION PRICE. The Conversion Price
shall be adjusted from time to time by the Company as follows:
(a) In case the Company shall hereafter pay a dividend
or make a distribution to all holders of the outstanding Common Stock in shares
of Common Stock, the Conversion Price in effect at the opening of business on
the date following the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution shall be reduced by multiplying
such Conversion Price by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become
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effective immediately after the opening of business on the day following the
date fixed for such determination. The Company will not pay any dividend or
make any distribution on shares of Common Stock held in the treasury of the
Company. If any dividend or distribution of the type described in this Section
15.5(a) is declared but not so paid or made, the Conversion Price shall again be
adjusted to the Conversion Price which would then be in effect if such dividend
or distribution had not been declared.
(b) In case the Company shall issue rights or warrants
to all holders of its outstanding shares of Common Stock entitling them (for a
period expiring within 45 days after the date fixed for determination of
stockholders entitled to receive such rights or warrants) to subscribe for or
purchase shares of Common Stock at a price per share less than the Current
Market Price (as defined below) on the date fixed for determination of
stockholders entitled to receive such rights or warrants, the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the date fixed
for determination of stockholders entitled to receive such rights or warrants by
a fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for determination of
stockholders entitled to receive such rights and warrants plus the number of
shares which the aggregate offering price of the total number of shares so
offered would purchase at such Current Market Price, and of which the
denominator shall be the number of shares of Common Stock outstanding on the
date fixed for determination of stockholders entitled to receive such rights and
warrants plus the total number of additional shares of Common Stock offered for
subscription or purchase. Such adjustment shall be successively made whenever
any such rights and warrants are issued, and shall become effective immediately
after the opening of business on the day following the date fixed for
determination of stockholders entitled to receive such rights or warrants. To
the extent that shares of Common Stock are not delivered after the expiration of
such rights or warrants, the Conversion Price shall be readjusted to the
Conversion Price which would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made on the basis of delivery of only
the number of shares of Common Stock actually delivered. In the event that such
rights or warrants are not so issued, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such date
fixed for the determination of stockholders entitled to receive such rights or
warrants had not been fixed. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase shares of Common Stock at less
than such Current Market Price, and in determining the aggregate offering price
of such shares of Common Stock, there shall be taken into account any
consideration received by the Company for such rights or warrants, the value of
such consideration, if other than cash, to be determined by the Board of
Directors.
(c) In case outstanding shares of Common Stock shall
be subdivided into a greater number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day upon
which such subdivision becomes effective shall be proportionately reduced, and
conversely, in case outstanding shares of Common Stock shall be combined into a
smaller number of shares of Common Stock, the Conversion Price in effect at the
opening of business on the day following the day upon which such combination
becomes effective shall be proportionately increased, such reduction or
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increase, as the case may be, to become effective immediately after the opening
of business on the day following the day upon which such subdivision or
combination becomes effective.
(d) In case the Company shall, by dividend or
otherwise, distribute to all holders of its Common Stock shares of any class of
capital stock of the Company (other than any dividends or distributions to which
Section 15.5(a) applies) or evidences of its indebtedness or assets (including
securities, but excluding any rights or warrants referred to in Section 15.5(b),
and excluding any dividend or distribution (x) paid exclusively in cash or (y)
referred to in Section 15.5(a) (any of the foregoing hereinafter in this Section
15.5(d) called the "Securities")), then, in each such case (unless the Company
elects to reserve such Securities for distribution to the Noteholders upon the
conversion of the Notes so that any such holder converting Notes will receive
upon such conversion, in addition to the shares of Common Stock to which such
holder is entitled, the amount and kind of such Securities which such holder
would have received if such holder had converted its Notes into Common Stock
immediately prior to the Record Date (as defined in Section 15.5(i) for such
distribution of the Securities)), the Conversion Price shall be reduced so that
the same shall be equal to the price determined by multiplying the Conversion
Price in effect on the Record Date with respect to such distribution by a
fraction of which the numerator shall be the Current Market Price per share of
the Common Stock on such Record Date less the fair market value (as determined
by the Board of Directors, whose determination shall be conclusive, and
described in a resolution of the Board if Directors) on the Record Date of the
portion of the Securities so distributed applicable to one share of Common Stock
and the denominator shall be the Current Market Price per share of the Common
Stock, such reduction to become effective immediately prior to the opening of
business on the day following such Record Date; PROVIDED, HOWEVER, that in the
event the then fair market value (as so determined) of the portion of the
Securities so distributed applicable to one share of Common Stock is equal to or
greater than the Current Market Price of the Common Stock on the Record Date, in
lieu of the foregoing adjustment, adequate provision shall be made so that each
Noteholder shall have the right to receive upon conversion the amount of
Securities such holder would have received had such holder converted each Note
on the Record Date. In the event that such dividend or distribution is not so
paid or made, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such dividend or distribution had not
been declared. If the Board of Directors determines the fair market value of
any distribution for purposes of this Section 15.5(d) by reference to the actual
or when issued trading market for any securities, it must in doing so consider
the prices in such market over the same period used in computing the Current
Market Price of the Common Stock.
The Company shall amend the Rights Agreement to provide that upon
conversion of the Notes the holders will receive, in addition to the Common
Stock issuable upon such conversion, the Rights issued under the Rights
Agreement (notwithstanding the occurrence of an event causing such rights to
separate from the Common Stock at or prior to the time of conversion). In the
event the Company implements a replacement or successor stockholder rights plan
("New Rights Plan"), such New Rights Plan shall provide that upon conversion of
the Notes the holders will receive, in addition to the Common Stock issuable
upon such conversion, the rights issued under such New Rights Plan
(notwithstanding the occurrence of an event causing such rights to separate from
the Common Stock at or prior to the time of conversion).
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Any distribution of rights or warrants pursuant to the New Rights Plan in
accordance with the requirements set forth in the immediately preceding sentence
of this paragraph shall not constitute a distribution of rights or warrants for
the purposes of this Section 15.5(d). The provisions of this Section 15.5 set
forth in the immediately succeeding paragraph will not apply to any Rights on or
after the date the Rights Agreement is amended in accordance with the
requirements set forth in the first sentence of this paragraph.
Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"): (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been distributed for
purposes of this Section 15.5 (and no adjustment to the Conversion Price under
this Section 15.5 will be required) until the occurrence of the earliest Trigger
Event, whereupon such rights and warrants shall be deemed to have been
distributed and an appropriate adjustment (if any is required) to the Conversion
Price shall be made under this Section 15.5(d). If any such right or warrant,
including any such existing rights or warrants distributed prior to the date of
this Indenture, are subject to events, upon the occurrence of which such rights
or warrants become exercisable to purchase different securities, evidences of
indebtedness or other assets, then the date of the occurrence of any and each
such event shall be deemed to be the date of distribution and record date with
respect to new rights or warrants with such rights (and a termination or
expiration of the existing rights or warrants without exercise by any of the
holders thereof). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event (of the
type described in the preceding sentence) with respect thereto that was counted
for purposes of calculating a distribution amount for which an adjustment to the
Conversion Price under this Section 15.5 was made, (1) in the case of any such
rights or warrants which shall all have been redeemed or repurchased without
exercise by any holders thereof, the Conversion Price shall be readjusted upon
such final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash distribution, equal
to the per share redemption or repurchase price received by a holder or holders
of Common Stock with respect to such rights or warrants (assuming such holder
had retained such rights or warrants), made to all holders of Common Stock as of
the date of such redemption or repurchase, and (2) in the case of such rights or
warrants which shall have expired or been terminated without exercise by any
holders thereof, the Conversion Price shall be readjusted as if such rights and
warrants had not been issued.
For purposes of this Section 15.5(d) and Sections 15.5(a) and (b), any
dividend or distribution to which this Section 15.5(d) is applicable that also
includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock (or both), shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, assets or shares of
capital stock other than such shares of Common Stock or rights or warrants (and
any Conversion Price reduction required by this Section 15.5(d) with respect to
such dividend or distribution shall then be made) immediately followed by (2) a
dividend or distribution of such shares of Common Stock or such rights or
warrants (and any further Conversion Price reduction
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required by Sections 15.5(a) and (b) with respect to such dividend or
distribution shall then be made), except (A) the Record Date of such dividend or
distribution shall be substituted as "the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution" and "the
date fixed for such determination" within the meaning of Sections 15.5(a) and
(b) and (B) any shares of Common Stock included in such dividend or distribution
shall not be deemed "outstanding at the close of business on the date fixed for
such determination" within the meaning of Section 15.5(a).
(e) In case the Company shall, by dividend or
otherwise, distribute to all holders of its Common Stock cash (excluding (x) any
quarterly cash dividend on the Common Stock to the extent the aggregate cash
dividend per share of Common Stock in any fiscal quarter does not exceed the
greater of (A) the amount per share of Common Stock of the next preceding
quarterly cash dividend on the Common Stock to the extent that such preceding
quarterly dividend did not require any adjustment of the Conversion Price
pursuant to this Section 15.5(e) (as adjusted to reflect subdivisions or
combinations of the Common Stock), and (B) 3.75% of the arithmetic average of
the Closing Price (determined as set forth in Section 15.5(i)) during the ten
Trading Days (as defined in Section 15.5(i)) immediately prior to the date of
declaration of such dividend, and (y) any dividend or distribution in connection
with the liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary), then, in such case, the Conversion Price shall be
reduced so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the close of business on such
Record Date by a fraction of which the numerator shall be the Current Market
Price of the Common Stock on the Record Date less the amount of cash so
distributed (and not excluded as provided above) applicable to one share of
Common Stock and the denominator shall be such Current Market Price of the
Common Stock, such reduction to be effective immediately prior to the opening of
business on the day following the Record Date; PROVIDED, HOWEVER, that in the
event the portion of the cash so distributed applicable to one share of Common
Stock is equal to or greater than the Current Market Price of the Common Stock
on the Record Date, in lieu of the foregoing adjustment, adequate provision
shall be made so that each Noteholder shall have the right to receive upon
conversion the amount of cash such holder would have received had such holder
converted each Note on the Record Date. In the event that such dividend or
distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
dividend or distribution had not been declared. If any adjustment is required
to be made as set forth in this Section 15.5(e) as a result of a distribution
that is a quarterly dividend, such adjustment shall be based upon the amount by
which such distribution exceeds the amount of the quarterly cash dividend
permitted to be excluded pursuant hereto. If an adjustment is required to be
made as set forth in this Section 15.5(e) above as a result of a distribution
that is not a quarterly dividend, such adjustment shall be based upon the full
amount of the distribution.
(f) In case a tender or exchange offer made by the
Company or any subsidiary of the Company for all or any portion of the Common
Stock shall expire and such tender or exchange offer (as amended upon the
expiration thereof) shall require the payment to stockholders of consideration
per share of Common Stock having a fair market value (as determined by the Board
of Directors, whose determination shall be conclusive and described in
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a resolution of the Board if Directors) that as of the last time (the
"Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it may be amended) that exceeds the Current Market Price of
the Common Stock on the Trading Day next succeeding the Expiration Time, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the Expiration Time by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding (including any tendered or exchanged shares)
on the Expiration Time multiplied by the Current Market Price of the Common
Stock on the Trading Day next succeeding the Expiration Time and the denominator
shall be the sum of (x) the fair market value (determined as aforesaid) of the
aggregate consideration payable to shareholders based on the acceptance (up to
any maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the Expiration Time
(the shares deemed so accepted, up to any such maximum, being referred to as the
"Purchased Shares") and (y) the product of the number of shares of Common Stock
outstanding (less any Purchased Shares) on the Expiration Time and the Current
Market Price of the Common Stock on the Trading Day next succeeding the
Expiration Time, such reduction to become effective immediately prior to the
opening of business on the day following the Expiration Time. In the event that
the Company is obligated to purchase shares pursuant to any such tender or
exchange offer, but the Company is permanently prevented by applicable law from
effecting any such purchases or all such purchases are rescinded, the Conversion
Price shall again be adjusted to be the Conversion Price which would then be in
effect if such tender or exchange offer had not been made.
(g) In case of a tender or exchange offer made by a
person other than the Company or any Subsidiary for an amount which increases
the offeror's ownership of Common Stock to more than 25% of the Common Stock
outstanding and shall involve the payment by such person of consideration per
share of Common Stock having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive, and described in a
resolution of the Board of Directors) at the last time (the "Expiration Time")
tenders or exchanges may be made pursuant to such tender or exchange offer (as
it shall have been amended) that exceeds the Current Market Price of the Common
Stock on the Trading Day next succeeding the Expiration Time, and in which, as
of the Expiration Time the Board of Directors is not recommending rejection of
the offer, the Conversion Price shall be reduced so that the same shall equal
the price determined by multiplying the Conversion Price in effect immediately
prior to the Expiration Time by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding (including any tendered or
exchanged shares) on the Expiration Time multiplied by the Current Market Price
of the Common Stock on the Trading Day next succeeding the Expiration Time and
the denominator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Purchased Shares") and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares) on the Expiration
Time and the Current Market Price of the Common Stock on the Trading Day next
succeeding the Expiration Time, such reduction to
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become effective immediately prior to the opening of business on the day
following the Expiration Time. In the event that such person is obligated to
purchase shares pursuant to any such tender or exchange offer, but such person
is permanently prevented by applicable law from effecting any such purchases or
all such purchases are rescinded, the Conversion Price shall again be adjusted
to be the Conversion Price which would then be in effect if such tender or
exchange offer had not been made. Notwithstanding the foregoing, the adjustment
described in this Section 15.5(g) shall not be made if, as of the Expiration
Time, the offering documents with respect to such offer disclose a plan or
intention to cause the Company to engage in any transaction described in Article
XII.
(h) In case the Company shall issue Common Stock or
securities convertible into, or exchangeable for, Common Stock at a price per
share (or having a conversion or exchange price per share) that is less than the
then Current Market Price of the Common Stock (but excluding, among other
things, issuances: (a) pursuant to any bona fide plan for the benefit of
employees, directors or consultants of the Company now or hereafter in effect;
(b) to acquire all or any portion of a business in an arm's-length transaction
between the Company and an unaffiliated third party including, if applicable,
issuances upon exercise of options or warrants assumed in connection with such
an acquisition; (c) in a bona fide public offering pursuant to a firm commitment
underwriting (or a similar type of offering made pursuant to Rule 144A and/or
Regulation S under the Securities Act) or sales at the market pursuant to a
continuous offering stock program; (d) pursuant to the exercise of warrants,
rights (including, without limitation, earnout rights) or options, or upon the
conversion of convertible securities, which are issued and outstanding on the
date hereof, or which may be issued in the future at fair value and with an
exercise price or conversion price at least equal to the Current Market Price of
the Common Stock at the time of issuance of such warrant, right, option or
convertible security; and (e) pursuant to a dividend reinvestment plan or other
plan hereafter adopted for the reinvestment of dividends or interest provided
that such Common Stock is issued at a price at least equal to 95% of the market
price of the Common Stock at the time of such issuance), the Conversion Price
shall be adjusted so that the holder of each Note shall be entitled to receive,
upon the conversion thereof, the number of shares of Common Stock determined by
multiplying (i) the Conversion Price on the day immediately prior to such date
of issuance by (ii) a fraction, the numerator of which shall be the sum of (A)
the number of shares of Common Stock outstanding on such date and (B) the number
of additional shares of Common Stock issued (or into which the convertible
securities may convert), and the denominator of which shall be the sum of (1)
the number of shares of Common Stock outstanding on such date and (2) the number
of shares of Common Stock which the aggregate consideration receivable by the
Company for the total number of shares of Common Stock so issued (or into which
the convertible securities may convert) would purchase at such Current Market
Price on such date. An adjustment made pursuant to this paragraph (h) shall be
made on the next Business Day following the date on which any such issuance is
made and shall be effective retroactively immediately after the close of
business on such date. For purposes of this paragraph (h), the aggregate
consideration receivable by the Company in connection with the issuance of
shares of Common Stock or of securities convertible into shares of Common Stock
shall be deemed to be equal to the sum of the aggregate offering price (before
deduction of underwriting discounts or commissions and
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expenses payable to third parties) of all such securities plus the minimum
aggregate amount, if any, payable upon conversion of any such convertible
securities into shares of Common Stock.
(i) For purposes of this Section 15.5, the following
terms shall have the meaning indicated:
(1) "Closing Price" with respect to any
securities on any day shall mean the closing sale price regular way on such day
or, in case no such sale takes place on such day, the average of the reported
closing bid and asked prices, regular way, in each case on the New York Stock
Exchange, or, if such security is not listed or admitted to trading on such
Exchange, on the principal national security exchange or quotation system on
which such security is quoted or listed or admitted to trading, or, if not
quoted or listed or admitted to trading on any national securities exchange or
quotation system, the average of the closing bid and asked prices of such
security on the over-the-counter market on the day in question as reported by
the National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or if not so available, in such manner as furnished by any
New York Stock Exchange member firm selected from time to time by the Board of
Directors for that purpose, or a price determined in good faith by the Board of
Directors or, to the extent permitted by applicable law, a duly authorized
committee thereof, whose determination shall be conclusive.
(2) "Current Market Price" shall mean the average
of the daily Closing Prices per share of Common Stock for the ten consecutive
Trading Days immediately prior to the date in question; PROVIDED, HOWEVER, that
(1) if the "ex" date (as hereinafter defined) for any event (other than the
issuance or distribution or Fundamental Change requiring such computation) that
requires an adjustment to the Conversion Price pursuant to Section 15.5(a), (b),
(c), (d), (e), (f), (g) or (h) occurs during such ten consecutive Trading Days,
the Closing Price for each Trading Day prior to the "ex" date for such other
event shall be adjusted by multiplying such Closing Price by the same fraction
by which the Conversion Price is so required to be adjusted as a result of such
other event, (2) if the "ex" date for any event (other than the issuance,
distribution or Fundamental Change requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section 15.5(a), (b), (c), (d),
(e), (f), (g) or (h) occurs on or after the "ex" date for the issuance or
distribution requiring such computation and prior to the day in question, the
Closing Price for each Trading Day on and after the "ex" date for such other
event shall be adjusted by multiplying such Closing Price by the reciprocal of
the fraction by which the Conversion Price is so required to be adjusted as a
result of such other event, and (3) if the "ex" date for the issuance,
distribution or Fundamental Change requiring such computation is prior to the
day in question, after taking into account any adjustment required pursuant to
clause (1) or (2) of this proviso, the Closing Price for each Trading Day on or
after such "ex" date shall be adjusted by adding thereto the amount of any cash
and the fair market value (as determined by the Board of Directors or, to the
extent permitted by applicable law, a duly authorized committee thereof in a
manner consistent with any determination of such value for purposes of Section
15.5(d), (f) or (g), whose determination shall be conclusive and described in a
resolution of the Board of Directors or such duly authorized committee thereof,
as the case may be) of the evidences of indebtedness, shares of capital stock or
assets being distributed applicable to one share of Common Stock as of the close
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of business on the day before such "ex" date. For purposes of any computation
under Section 15.5(f) or (g), the Current Market Price of the Common Stock on
any date shall be deemed to be the average of the daily Closing Prices per share
of Common Stock for such day and the next two succeeding Trading Days; PROVIDED,
HOWEVER, that if the "ex" date for any event (other than the tender or exchange
offer requiring such computation) that requires an adjustment to the Conversion
Price pursuant to Section 15.5(a), (b), (c), (d), (e), (f), (g) or (h) occurs on
or after the Expiration Time for the tender or exchange offer requiring such
computation and prior to the day in question, the Closing Price for each Trading
Day on and after the "ex" date for such other event shall be adjusted by
multiplying such Closing Price by the reciprocal of the fraction by which the
Conversion Price is so required to be adjusted as a result of such other event.
For purposes of this paragraph, the term "ex" date, (1) when used with respect
to any issuance or distribution, means the first date on which the Common Stock
trades regular way on the relevant exchange or in the relevant market from which
the Closing Price was obtained without the right to receive such issuance or
distribution, (2) when used with respect to any subdivision or combination of
shares of Common Stock, means the first date on which the Common Stock trades
regular way on such exchange or in such market after the time at which such
subdivision or combination becomes effective, and (3) when used with respect to
any tender or exchange offer means the first date on which the Common Stock
trades regular way on such exchange or in such market after the Expiration Time
of such offer.
(3) "fair market value" shall mean the amount
which a willing buyer would pay a willing seller in an arm's length transaction.
(4) "Record Date" shall mean, with respect to any
dividend, distribution or other transaction or event in which the holders of
Common Stock have the right to receive any cash, securities or other property or
in which the Common Stock (or other applicable security) is exchanged for or
converted into any combination of cash, securities or other property, the date
fixed for determination of shareholders entitled to receive such cash,
securities or other property (whether such date is fixed by the Board of
Directors or by statute, contract or otherwise).
(5) "Trading Day" shall mean (x) if the
applicable security is listed or admitted for trading on the New York Stock
Exchange or another national security exchange, a day on which the New York
Stock Exchange or another national security exchange is open for business or (y)
if the applicable security is quoted on the Nasdaq National Market, a day on
which trades may be made on thereon or (z) if the applicable security is not so
listed, admitted for trading or quoted, any day other than a Saturday or Sunday
or a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
(j) The Company may make such reductions in the
Conversion Price, in addition to those required by Sections 15.5 (a), (b), (c),
(d), (e), (f), (g) and (h) as the Board of Directors considers to be advisable
to avoid or diminish any income tax to holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or distribution of stock (or
rights to acquire stock) or from any event treated as such for income tax
purposes.
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To the extent permitted by applicable law, the Company from time to
time may reduce the Conversion Price by any amount for any period of time if the
period is at least twenty (20) days, the reduction is irrevocable during the
period and the Board of Directors shall have made a determination that such
reduction would be in the best interests of the Company, which determination
shall be conclusive. Whenever the Conversion Price is reduced pursuant to the
preceding sentence, the Company shall mail to holders of record of the Notes a
notice of the reduction at least fifteen (15) days prior to the date the reduced
Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period during which it will be in effect.
(k) No adjustment in the Conversion Price shall be
required unless such adjustment would require an increase or decrease of at
least 1% in such price; PROVIDED, HOWEVER, that any adjustments which by reason
of this Section 15.5(k) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Article XV shall be made by the Company and shall be made to the nearest cent or
to the nearest one hundredth of a share, as the case may be. No adjustment need
be made for rights to purchase Common Stock pursuant to a Company plan for
reinvestment of dividends or interest. To the extent the Notes become
convertible into cash, assets, property or securities (other than capital stock
of the Company), no adjustment need be made thereafter as to the cash, assets,
property or such securities. Interest will not accrue on the cash.
(l) Whenever the Conversion Price is adjusted as
herein provided, the Company shall promptly file with the Trustee and any
conversion agent other than the Trustee an Officers' Certificate setting forth
the Conversion Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment. Promptly after delivery of such
certificate, the Company shall prepare a notice of such adjustment of the
Conversion Price setting forth the adjusted Conversion Price and the date on
which each adjustment becomes effective and shall mail such notice of such
adjustment of the Conversion Price to the holder of each Note at his last
address appearing on the Note register provided for in Section 2.5 of this
Indenture, within 20 days after execution thereof. Failure to deliver such
notice shall not affect the legality or validity of any such adjustment.
(m) In any case in which this Section 15.5 provides
that an adjustment shall become effective immediately after a record date for an
event, the Company may defer until the occurrence of such event (i) issuing to
the holder of any Note converted after such record date and before the
occurrence of such event the additional shares of Common Stock issuable upon
such conversion by reason of the adjustment required by such event over and
above the Common Stock issuable upon such conversion before giving effect to
such adjustment and (ii) paying to such holder any amount in cash in lieu of any
fraction pursuant to Section 15.3.
(n) For purposes of this Section 15.5, the number of
shares of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common Stock. The
Company will not pay any dividend or make any distribution on shares of Common
Stock held in the treasury of the Company.
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Section 15.6 EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. If any of the following events occur, namely (i) any reclassification or
change of the outstanding shares of Common Stock (other than a subdivision or
combination to which Section 15.5(c) applies), (ii) any consolidation, merger or
combination of the Company with another corporation as a result of which holders
of Common Stock shall be entitled to receive stock, securities or other property
or assets (including cash) with respect to or in exchange for such Common Stock,
or (iii) any sale or conveyance of the properties and assets of the Company as,
or substantially as, an entirety to any other corporation as a result of which
holders of Common Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock, then the Company or the successor or purchasing corporation, as
the case may be, shall execute with the Trustee a supplemental indenture (which
shall comply with the Trust Indenture Act as in force at the date of execution
of such supplemental indenture) providing that such Note shall be convertible
into the kind and amount of shares of stock and other securities or property or
assets (including cash) receivable upon such reclassification, change,
consolidation, merger, combination, sale or conveyance by a holder of a number
of shares of Common Stock issuable upon conversion of such Notes (assuming, for
such purposes, a sufficient number of authorized shares of Common Stock
available to convert all such Notes) immediately prior to such reclassification,
change, consolidation, merger, combination, sale or conveyance assuming such
holder of Common Stock did not exercise his rights of election, if any, as to
the kind or amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance (provided that, if
the kind or amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance is not the same
for each share of Common Stock in respect of which such rights of election shall
not have been exercised ("nonelecting share")), then for the purposes of this
Section 15.6 the kind and amount of securities, cash or other property
receivable upon such consolidation, merger, statutory exchange, sale or
conveyance for each non-electing share shall be deemed to be the kind and amount
so receivable per share by a plurality of the non-electing shares. Such
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Article.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Notes, at his address appearing on the
Note register provided for in Section 2.5 of this Indenture, within twenty (20)
days after execution thereof. Failure to deliver such notice shall not affect
the legality or validity of such supplemental indenture.
The above provisions of this Section shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
If this Section 15.6 applies to any event or occurrence, Section 15.5
shall not apply.
Section 15.7 TAXES ON SHARES ISSUED. The issue of stock
certificates on conversions of Notes shall be made without charge to the
converting Noteholder for any tax in respect of the issue thereof. The Company
shall not, however, be required to pay any tax which
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may be payable in respect of any transfer involved in the issue and delivery of
stock in any name other than that of the holder of any Note converted, and the
Company shall not be required to issue or deliver any such stock certificate
unless and until the person or persons requesting the issue thereof shall have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
Section 15.8 RESERVATION OF SHARES; SHARES TO BE FULLY PAID;
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS; LISTING OF COMMON STOCK. The Company
shall provide, free from preemptive rights, out of its authorized but unissued
shares or shares held in treasury, sufficient shares of Common Stock to provide
for the conversion of the Notes from time to time as such Notes are presented
for conversion.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Notes, the Company will take all corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such
adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Notes will upon issue be fully paid and non-assessable
by the Company and free from all taxes, liens and charges with respect to the
issue thereof.
The Company covenants that if any shares of Common Stock to be
provided for the purpose of conversion of Notes hereunder require registration
with or approval of any governmental authority under any federal or state law
before such shares may be validly issued upon conversion, the Company will in
good faith and as expeditiously as possible endeavor to secure such registration
or approval, as the case may be.
The Company further covenants that if at any time the Common Stock
shall be listed on the Nasdaq National Market or any other national securities
exchange or automated quotation system the Company will, if permitted by the
rules of such exchange or automated quotation system, list and keep listed, so
long as the Common Stock shall be so listed on such exchange or automated
quotation system, all Common Stock issuable upon conversion of the Notes;
PROVIDED, HOWEVER, that if rules of such exchange or automated quotation system
permit the Company to defer the listing of such Common Stock until the first
conversion of the Notes into Common Stock in accordance with the provisions of
this Indenture, the Company covenants to list such Common Stock issuable upon
conversion of the Notes in accordance with the requirements of such exchange or
automated quotation system at such time.
Section 15.9 RESPONSIBILITY OF TRUSTEE. The Trustee and any other
conversion agent shall not at any time be under any duty or responsibility to
any holder of Notes to determine the Conversion Price or whether any facts exist
which may require any adjustment of the Conversion Price, or with respect to the
nature or extent or calculation of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. The Trustee and any
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other conversion agent shall not be accountable with respect to the validity or
value (or the kind or amount) of any shares of Common Stock, or of any
securities or property, which may at any time be issued or delivered upon the
conversion of any Note; and the Trustee and any other conversion agent make no
representations with respect thereto. Neither the Trustee nor any conversion
agent shall be responsible for any failure of the Company to issue, transfer or
deliver any shares of Common Stock or stock certificates or other securities or
property or cash upon the surrender of any Note for the purpose of conversion or
to comply with any of the duties, responsibilities or covenants of the Company
contained in this Article. Without limiting the generality of the foregoing,
neither the Trustee nor any conversion agent shall be under any responsibility
to determine the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 15.6 relating either to the kind or
amount of shares of stock or securities or property (including cash) receivable
by Noteholders upon the conversion of their Notes after any event referred to in
such Section 15.6 or to any adjustment to be made with respect thereto, but,
subject to the provisions of Section 8.1, may accept as conclusive evidence of
the correctness of any such provisions, and shall be protected in relying upon,
the Officers' Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.
Section 15.10 NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS. In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock that would require an adjustment in the
Conversion Price pursuant to Section 15.5; or
(b) the Company shall authorize the granting to the
holders of its Common Stock of rights or warrants to subscribe for or purchase
any share of any class or any other rights or warrants; or
(c) of any reclassification or reorganization of the
Common Stock of the Company (other than a subdivision or combination of its
outstanding Common Stock, or a change in par value, or from par value to no par
value, or from no par value to par value), or of any consolidation or merger to
which the Company is a party and for which approval of any shareholders of the
Company is required, or of the sale or transfer of all or substantially all of
the assets of the Company; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at his address appearing on the Note register provided for in
Section 2.5 of this Indenture, as promptly as possible but in any event at least
fifteen (15) days prior to the applicable date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights are to be determined, or (y) the date
on which such reclassification, consolidation, merger,
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sale, transfer, dissolution, liquidation or winding-up is expected to become
effective or occur, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of such dividend, distribution, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
Section 16.1 PROVISIONS BINDING ON COMPANY'S SUCCESSORS. All the
covenants, stipulations, promises and agreements by the Company contained in
this Indenture shall bind its successors and assigns whether so expressed or
not.
Section 16.2 OFFICIAL ACTS BY SUCCESSOR CORPORATION. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Company.
Section 16.3 ADDRESSES FOR NOTICES, ETC. Any notice or demand which
by any provision of this Indenture is required or permitted to be given or
served by the Trustee or by the holders of Notes on the Company shall be deemed
to have been sufficiently given or made, for all purposes, if given or served by
being deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with the
Trustee) to Heartport, Inc., 200 Chesapeake Drive, Redwood City, California
94063, Attention: Chief Operating Officer. Any notice, direction, request or
demand hereunder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or served by being
deposited postage prepaid by registered or certified mail in a post office
letter box addressed to the Corporate Trust Office, which office is, at the date
as of which this Indenture is dated, located at 101 Barclay St., Floor 21 West,
New York, New York 10286, Attention: Corporate Trust Administration.
The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication mailed to a Noteholder shall be mailed to
him by first class mail, postage prepaid, at his address as it appears on the
Note register and shall be sufficiently given to him if so mailed within the
time prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
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Section 16.4 GOVERNING LAW. This Indenture and each Note shall be
deemed to be a contract made under the laws of New York, and for all purposes
shall be construed in accordance with the laws of New York.
Section 16.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT;
CERTIFICATES TO TRUSTEE. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been complied
with.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include (1) a statement that the person
making such certificate or opinion has read such covenant or condition; (2) a
brief statement as to the nature and scope of the examination or investigation
upon which the statement or opinion contained in such certificate or opinion is
based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Section 16.6 LEGAL HOLIDAYS. In any case where the date of maturity
of interest on or principal of the Notes or the date fixed for redemption of any
Note will not be a Business Day, then payment of such interest on or principal
of the Notes need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
maturity or the date fixed for redemption, and no interest shall accrue for the
period from and after such date.
Section 16.7 TRUST INDENTURE ACT. This Indenture is hereby made
subject to, and shall be governed by, the provisions of the Trust Indenture Act
required to be part of and to govern indentures qualified under the Trust
Indenture Act; PROVIDED, HOWEVER, that, unless otherwise required by law,
notwithstanding the foregoing, this Indenture and the Notes issued hereunder
shall not be subject to the provisions of subsections (a)(1), (a)(2), and (a)(3)
of Section 314 of the Trust Indenture Act as now in effect or as hereafter
amended or modified; PROVIDED, FURTHER, that this Section 16.7 shall not require
this Indenture or the Trustee to be qualified under the Trust Indenture Act
prior to the time such qualification is in fact required under the terms of the
Trust Indenture Act, nor shall it constitute any admission or acknowledgment by
any party to such supplemental indenture that any such qualification is required
prior to the time such qualification is in fact required under the terms of the
Trust Indenture Act. If any provision hereof limits, qualifies or conflicts
with another provision hereof which is required to be included in an indenture
qualified under the Trust Indenture Act, such required provision shall control.
Section 16.8 NO SECURITY INTEREST CREATED. Nothing in this
Indenture or in the Notes, expressed or implied, shall be construed to
constitute a security interest under the Uniform
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Commercial Code or similar legislation, as now or hereafter enacted and in
effect, in any jurisdiction where property of the Company or its subsidiaries is
located.
Section 16.9 BENEFITS OF INDENTURE. Nothing in this Indenture or in
the Notes, expressed or implied, shall give to any Person, other than the
parties hereto, any paying agent, any authenticating agent, any Note registrar
and their successors hereunder, the holders of Notes and the holders of Senior
Indebtedness, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
Section 16.10 TABLE OF CONTENTS, HEADINGS, ETC. The table of
contents and the titles and headings of the articles and sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
Section 16.11 AUTHENTICATING AGENT. The Trustee may appoint an
authenticating agent which shall be authorized to act on its behalf and subject
to its direction in the authentication and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Sections 2.4, 2.5, 2.6, 2.7, 3.3 and 3.5, as fully to all
intents and purposes as though the authenticating agent had been expressly
authorized by this Indenture and those Sections to authenticate and deliver
Notes. For all purposes of this Indenture, the authentication and delivery of
Notes by the authenticating agent shall be deemed to be authentication and
delivery of such Notes "by the Trustee" and a certificate of authentication
executed on behalf of the Trustee by an authenticating agent shall be deemed to
satisfy any requirement hereunder or in the Notes for the Trustee's certificate
of authentication. Such authenticating agent shall at all times be a person
eligible to serve as trustee hereunder pursuant to Section 8.9.
Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section 16.11, without the execution or filing of any paper or any further act
on the part of the parties hereto or the authenticating agent or such successor
corporation.
Any authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any authenticating agent by giving written notice
of termination to such authenticating agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any authenticating agent shall cease to be eligible under this Section, the
Trustee shall either promptly appoint a successor authenticating agent or itself
assume the duties and obligations of the former authenticating agent under this
Indenture, and upon such appointment of a successor authenticating agent, if
made, shall give written notice of such appointment of a successor
authenticating agent to the Company and shall mail notice of
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such appointment of a successor authenticating agent to all holders of Notes as
the names and addresses of such holders appear on the Note register.
The Trustee agrees to pay to the authenticating agent from time to
time reasonable compensation for its services (to the extent pre-approved by the
Company in writing), and the Trustee shall be entitled to be reimbursed for such
pre-approved payments, subject to Section 8.6.
The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section 16.11
shall be applicable to any authenticating agent.
Section 16.12 EXECUTION IN COUNTERPARTS. This Indenture may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
The Bank of New York hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions hereinabove set forth.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed.
HEARTPORT, INC.
By: /s/ David B. Singer
-----------------------------------
Name: David B. Singer
Title: Senior Vice President, Finance
and Chief Executive Officer
THE BANK OF NEW YORK,
TRUSTEE
By: /s/ Vivian George
-------------------------------
Name: Vivian George
Title: Assistant Vice President
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EXHIBIT A
[For global Note only:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE
"DEPOSITARY," WHICH TERM INCLUDES ANY SUCCESSOR DEPOSITARY FOR THE CERTIFICATES)
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DEPOSITARY AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. (OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT)
("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THE NOTE EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES THAT
IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF
THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION), RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR
THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO HEARTPORT,
INC. OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO THE BANK OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR A SUCCESSOR
TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE
904 UNDER THE SECURITIES ACT, (E) PURSUANT TO
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THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE
AT THE TIME OF SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE 1(F) ABOVE), IT WILL FURNISH TO THE BANK OF NEW YORK, AS
TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (4) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION
WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE
HOLDING PERIOD APPLICABLE TO SALES OF THE NOTE EVIDENCED HEREBY UNDER RULE
144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER
OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE BANK OF NEW YORK, AS TRUSTEE
(OR A SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE BANK OF NEW YORK, AS TRUSTEE
(OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE
REMOVED UPON THE EARLIER OF THE TRANSFER OF THE NOTE EVIDENCED HEREBY PURSUANT
TO CLAUSE 1(F) ABOVE OR UPON ANY TRANSFER OF THE NOTES EVIDENCED HEREBY UNDER
RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
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HEARTPORT, INC.
7 1/4% CONVERTIBLE SUBORDINATED NOTE DUE 2004
No. CUSIP
------------------- -----------
Heartport, Inc., a corporation duly organized and validly existing
under the laws of the State of Delaware (herein called the "Company"), which
term includes any successor corporation under the Indenture referred to on the
reverse hereof, for value received hereby promises to pay to ___________ or
registered assigns, the principal sum of ____________ ($________ ) on May 1,
2004, at the office or agency of the Company maintained for that purpose in
accordance with the terms of the Indenture, or, at the option of the holder of
this Note, at the Corporate Trust Office, in such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts, and to pay interest, semi-annually on May 1
and November 1 of each year, commencing November 1, 1997, on said principal sum
at said office or agency, in like coin or currency, at the rate per annum of
7 1/4% from May 1 or November 1, as the case may be, next preceding the date of
this Note to which interest has been paid or duly provided for, unless the date
hereof is a date to which interest has been paid or duly provided for, in which
case from the date of this Note, or unless no interest has been paid or duly
provided for on the Notes, in which case from April 18, 1997, until payment of
said principal sum has been made or duly provided for. Notwithstanding the
foregoing, if the date hereof is after any April 15 or October 15, as the case
may be, and before the following May 1 or November 1, this Note shall bear
interest from such May 1 or November 1; PROVIDED, HOWEVER, that if the Company
shall default in the payment of interest due on such May 1 or November 1, then
this Note shall bear interest from the next preceding May 1 or November 1 to
which interest has been paid or duly provided for or, if no interest has been
paid or duly provided for on such Note, from April 18, 1997. The interest
payable on the Note pursuant to the Indenture on any May 1 or November 1 will be
paid to the person entitled thereto as it appears in the Note register at the
close of business on the record date, which shall be the April 15 or October 15
(whether or not a Business Day) next preceding such May 1 or November 1, as
provided in the Indenture; PROVIDED that any such interest not punctually paid
or duly provided for shall be payable as provided in the Indenture. Interest
may, at the option of the Company, be paid either (i) by check mailed to the
registered address of such person (provided that the holder of Notes with an
aggregate principal amount in excess of $2,000,000 shall, at the written
election of such holder, be paid by wire transfer in immediately available
funds), or (ii) by transfer to an account maintained by such person located in
the United States.
Interest on the Notes shall be computed on the basis of a year of
twelve 30-day months.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, including, without limitation, provisions subordinating the
payment of principal of and premium, if any, and interest on the Notes to the
prior payment in full of all Senior Indebtedness,
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as defined in the Indenture, and provisions giving the holder of this Note the
right to convert this Note into Common Stock of the Company on the terms and
subject to the limitations referred to on the reverse hereof and as more fully
specified in the Indenture. Such further provisions shall for all purposes have
the same effect as though fully set forth at this place.
This Note shall be deemed to be a contract made under the laws of the
State of New York, and for all purposes shall be construed in accordance with
and governed by the laws of said State.
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by the Trustee or a duly authorized authenticating agent under the Indenture.
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IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
HEARTPORT, INC.
By:
--------------------------------
Attest:
----------------------------
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in the
within-named Indenture.
THE BANK OF NEW YORK, as Trustee
By:
----------------------------------------------------
Authorized Signatory
By:
----------------------------------------------------
As Authenticating Agent (if different from Trustee)
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[FORM OF REVERSE OF NOTE]
HEARTPORT, INC.
7 1/4% CONVERTIBLE SUBORDINATED NOTE DUE 2004
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 7 1/4% Convertible Subordinated Notes due 2004 (herein called
the "Notes"), limited to the aggregate principal amount of $86,250,000 all
issued or to be issued under and pursuant to an indenture dated as of April 15,
1997 (herein called the "Indenture"), between the Company and The Bank of New
York as trustee (herein called the "Trustee"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Company and the holders of the Notes.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of and accrued interest on all Notes
may be declared, and upon said declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, evidenced as in
the Indenture provided, to execute supplemental indentures adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Indenture or of any supplemental indenture or modifying in any manner the rights
of the holders of the Notes; PROVIDED, HOWEVER, that no such supplemental
indenture shall (i) extend the fixed maturity of any Note, or reduce the rate or
extend the time of payment of interest thereon, or reduce the principal amount
thereof or premium, if any, thereon, or reduce any amount payable on redemption
thereof, or impair the right of any Noteholder to institute suit for the payment
thereof, or make the principal thereof or interest or premium, if any, thereon
payable in any coin or currency other than that provided in the Note, or modify
the provisions of the Indenture with respect to the subordination of the Notes
in a manner adverse to the Noteholders in any material respect, or change the
obligation of the Company to make redemption of any Note upon the happening of a
Fundamental Change in a manner adverse to the holder of the Notes, or impair the
right to convert the Notes into Common Stock subject to the terms set forth in
the Indenture, including Section 15.6 thereof, without the consent of the holder
of each Note so affected or (ii) reduce the aforesaid percentage of Notes, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of all Notes then outstanding. It is also
provided in the Indenture that, prior to any declaration accelerating the
maturity of the Notes, the holders of a majority in aggregate principal amount
of the Notes at the time outstanding may on behalf of the holders of all of the
Notes waive any past default or Event of Default under the Indenture and its
consequences except a default in the payment of interest or any premium on or
the principal of any of the Notes, a default in the payment of redemption price
pursuant to Article III or a failure by the Company to convert any
<PAGE>
Notes into Common Stock of the Company. Any such consent or waiver by the
holder of this Note (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such holder and upon all future holders and owners
of this Note and any Notes which may be issued in exchange or substitute hereof,
irrespective of whether or not any notation thereof is made upon this Note or
such other Notes.
The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, expressly subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness of the Company,
as defined in the Indenture, whether outstanding at the date of the Indenture or
thereafter incurred, and this Note is issued subject to the provisions of the
Indenture with respect to such subordination. Each holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate the subordination so provided and appoints the Trustee
his attorney-in-fact for such purpose.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the place, at the respective times, at the rate and in the coin
or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a year of
twelve 30-day months.
The Notes are issuable in registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000. At the office or
agency of the Company referred to on the face hereof, and in the manner and
subject to the limitations provided in the Indenture, without payment of any
service charge but with payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration or
exchange of Notes, Notes may be exchanged for a like aggregate principal amount
of Notes of other authorized denominations.
The Notes will not be redeemable at the option of the Company prior to
May 4, 2000. At any time on or after May 4, 2000, and prior to maturity the
Notes may be redeemed at the option of the Company as a whole, or from time to
time in part, upon mailing a notice of such redemption not less than 30 days
before the date fixed for redemption to the holders of Notes at their last
registered addresses, all as provided in the Indenture, at the following
optional redemption prices (expressed as percentages of the principal amount),
together in each case with accrued interest to, but excluding, the date fixed
for redemption.
If redeemed during the 12-month period beginning May 1 (beginning May
4, 2000 and ending on April 30, 2001 in the case of the first such period):
2
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Year Percentage Year Percentage
- ---- ---------- ---- ----------
2000 . . . . . . . . . 104.143% 2002. . . . . . . 102.071%
2001 . . . . . . . . . 103.107 2003. . . . . . . 101.036
and 100% at May 1, 2004; PROVIDED that if the date fixed for redemption is on
May 1 or November 1, then the interest payable on such date shall be paid to the
holder of record on the next preceding April 15 or October 15, respectively.
The Notes are not subject to redemption through the operation of any
sinking fund.
If a Fundamental Change (as defined in the Indenture) occurs at any
time prior to May 1, 2004, the Notes will be redeemable on the 30th day after
notice thereof at the option of the holder. Such payment shall be made at the
following prices (expressed as percentages of the principal amount) in the event
of a Fundamental Change occurring during the 12-month period beginning May 1:
Year Percentage Year Percentage
- ---- ---------- ---- ----------
1997 . . . . . . . . . 107.250% 2001. . . . . . . 103.107%
1998 . . . . . . . . . 106.214 2002. . . . . . . 102.071
1999 . . . . . . . . . 105.179 2003. . . . . . . 101.036
2000 . . . . . . . . . 104.143
and 100% at May 1, 2004; provided in each case that if the Applicable Price (as
defined in the Indenture) is less than the Reference Market Price (as defined in
the Indenture), the Company shall redeem such Notes at a price equal to the
foregoing repayment price multiplied by the fraction obtained by dividing the
Applicable Price by the Reference Market Price. In each case, the Company shall
also pay accrued interest, if any, on such Notes to, but excluding, the
repayment date; PROVIDED that if such repayment date is May 1 or November 1,
then the interest payable on such date shall be paid to the holder of record of
the Note on the next preceding April 15 or October 15. The Company shall mail
to all holders of record of the Notes a notice of the occurrence of a
Fundamental Change and of the redemption right arising as a result thereof on or
before the 10th day after the occurrence of such Fundamental Change. For a Note
to be so repaid at the option of the holder, the Company must receive at the
office or agency of the Company maintained for that purpose in accordance with
the terms of the Indenture, such Note with the form entitled "Option to Elect
Repayment Upon a Fundamental Change" on the reverse thereof duly completed,
together with such Notes duly endorsed for transfer, on or before the 30th day
after the date of such notice (or if such 30th day is not a Business Day, the
immediately preceding Business Day).
3
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Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time prior to the close of business on May 1, 2004,
or, as to all or any portion hereof called for redemption, prior to the close of
business on the Business Day immediately preceding the date fixed for redemption
(unless the Company shall default in payment due upon redemption thereof), to
convert the principal hereof or any portion of such principal which is $1,000 or
an integral multiple thereof, into that number of shares of Company's Common
Stock, as said shares shall be constituted at the date of conversion, obtained
by dividing the principal amount of this Note or portion thereof to be converted
by the Conversion Price of $28.958 or such Conversion Price as adjusted from
time to time as provided in the Indenture, upon surrender of this Note, together
with a conversion notice as provided in the Indenture, to the Company at the
office or agency of the Company maintained for that purpose in accordance with
the terms of the Indenture, or at the option of such holder, the Corporate Trust
Office, and, unless the shares issuable on conversion are to be issued in the
same name as this Note, duly endorsed by, or accompanied by instruments of
transfer in form satisfactory to the Company duly executed by, the holder or by
his duly authorized attorney. No adjustment in respect of interest or dividends
will be made upon any conversion; PROVIDED, HOWEVER, that if this Note shall be
surrendered for conversion during the period from the close of business on any
record date for the payment of interest to the close of business on the Business
Day preceding the interest payment date, this Note (unless it or the portion
being converted shall have been called for redemption during the period from the
close of business on any record date for the payment of interest to the close of
business on the Business Day preceding the interest payment date) must be
accompanied by an amount, in New York Clearing House funds or other funds
acceptable to the Company, equal to the interest payable on such interest
payment date on the principal amount being converted. No fractional shares will
be issued upon any conversion, but an adjustment in cash will be made, as
provided in the Indenture, in respect of any fraction of a share which would
otherwise be issuable upon the surrender of any Note or Notes for conversion.
Any Notes called for redemption, unless surrendered for conversion on
or before the close of business on the date fixed for redemption, may be deemed
to be purchased from the holder of such Notes at an amount equal to the
applicable redemption price, together with accrued interest to the date fixed
for redemption, by one or more investment bankers or other purchasers who may
agree with the Company to purchase such Notes from the holders thereof and
convert them into Common Stock of the Company and to make payment for such Notes
as aforesaid to the Trustee in trust for such holders.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company maintained for that purpose in accordance with
the terms of the Indenture, or at the option of the holder of this Note, at the
Corporate Trust Office, a new Note or Notes of authorized denominations for an
equal aggregate principal amount will be issued to the transferee in exchange
thereof, subject to the limitations provided in the Indenture, without charge
except for any tax or other governmental charge imposed in connection therewith.
The Company, the Trustee, any authenticating agent, any paying agent,
any conversion agent and any Note registrar may deem and treat the registered
holder hereof as the absolute owner of this Note (whether or not this Note shall
be overdue and notwithstanding any
4
<PAGE>
notation of ownership or other writing hereon made by anyone other than the
Company or any Note registrar), for the purpose of receiving payment hereof, or
on account hereof, for the conversion hereof and for all other purposes, and
neither the Company nor the Trustee nor any other authenticating agent nor any
paying agent nor any other conversion agent nor any Note registrar shall be
affected by any notice to the contrary. All payments made to or upon the order
of such registered holder shall, to the extent of the sum or sums paid, satisfy
and discharge liability for monies payable on this Note.
No recourse for the payment of the principal of or any premium or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Note, or because of the creation of any indebtedness represented thereby, shall
be had against any incorporator, stockholder, employee, agent, officer or
director or subsidiary, as such, past, present or future, of the Company or of
any successor corporation, either directly or through the Company or any
successor corporation, whether by virtue of any constitution, statute or rule of
law or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.
Terms used in this Note and defined in the Indenture are used herein
as therein defined.
5
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the
entireties
JT TEN - as joint tenants with
right of survivorship
and not as tenants in
common
UNIF GIFT MIN ACT -- ___________ Custodian____________
(Cust) (Minor)
under Uniform Gifts to Minors Act
____________________________________________
(State)
Additional abbreviations may also be used
though not in the above list.
<PAGE>
CONVERSION NOTICE
To: HEARTPORT, INC.
The undersigned registered owner of this Note hereby irrevocably
exercises the option to convert this Note, or the portion hereof (which is
$1,000 or an integral multiple thereof) below designated, into shares of Common
Stock of Heartport, Inc. in accordance with the terms of the Indenture referred
to in this Note, and directs that the shares issuable and deliverable upon such
conversion, together with any check in payment for fractional shares and any
Notes representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
check the appropriate box below and pay all transfer taxes payable with respect
thereto. Any amount required to be paid to the undersigned on account of
interest accompanies this Note.
Dated:____________________
------------------------------
------------------------------
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or a
member firm of a major stock exchange if
shares of Common Stock are to be issued,
or Notes to be delivered, other than to
and in the name of the registered
holder.
------------------------------
Signature Guarantee
<PAGE>
Fill in for registration of shares of Common Stock if to be issued, and Notes if
to be delivered, other than to and in the name of the registered holder:
- -----------------------------
(Name)
- -----------------------------
(Street Address)
- -----------------------------
(City, State and Zip Code)
Please print name and address
Principal amount to be converted
(if less than all): $___________
Social Security or Other Taxpayer
Identification Number
2
<PAGE>
OPTION TO ELECT REPAYMENT
UPON A FUNDAMENTAL CHANGE
To: HEARTPORT, INC.
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from Heartport, Inc. (the "Company") as to the
occurrence of a Fundamental Change with respect to the Company and requests and
instructs the Company to repay the entire principal amount of this Note, or the
portion thereof (which is $1,000 or an integral multiple thereof) below
designated, in accordance with the terms of the Indenture referred to in this
Note at the redemption price, together with accrued interest to, but excluding,
such date, to the registered holder hereof.
Dated:
----------------------------- -----------------------------------
-----------------------------------
Signature(s)
NOTICE: The above signatures of the
holder(s) hereof must correspond with
the name as written upon the face of the
Note in every particular without
alteration or enlargement or any change
whatever.
Principal amount to be converted (if less than all):
$____________
- ---------------------------------------------------------
Social Security or Other Taxpayer Identification Number
<PAGE>
ASSIGNMENT
For value received ________________________ hereby sell(s), assign(s)
and transfer(s) unto _____________________ (Please insert social security or
other Taxpayer Identification Number of assignee) the within Note, and hereby
irrevocably constitutes and appoints ________________ attorney to transfer the
said Note on the books of the Company, with full power of substitution in the
premises.
In connection with any transfer of the Note within the period prior to
the expiration of the holding period applicable to sales thereof under Rule
144(k) (other than any transfer pursuant to a registration statement that has
been declared effective under the Securities Act), under the Securities Act (or
any successor provision), the undersigned confirms that such Note is being
transferred:
To Heartport, Inc. or a subsidiary thereof; or
Pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; or
To an Institutional Accredited Investor pursuant to and in compliance
with the Securities Act of 1933, as amended; or
Pursuant to and in compliance with Regulation S under the Securities
Act of 1933, as amended; or
Pursuant to and in compliance with Rule 144 under the Securities Act
of 1933, as amended;
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate").
The transferee is an Affiliate of the Company.
Dated:____________________
-----------------------------------
-----------------------------------
Signature(s)
<PAGE>
Signature(s) must be guaranteed by a
commercial bank or trust company or a
member firm of a major stock exchange if
shares of Common Stock are to be issued,
or Notes to be delivered, other than to
or in the name of the registered holder.
-----------------------------------
Signature Guarantee
NOTICE: The signature on the conversion notice, the option to elect repayment
upon a Fundamental Change or the assignment must correspond with the name as
written upon the face of the Note in every particular without alteration or
enlargement or any change whatever.
<PAGE>
EXHIBIT B
---------
Heartport, Inc.
200 Chesapeake Drive
Redwood City, CA 94063
The Bank of New York
101 Barclay Street
Floor 21 West
New York, NY 10826
Gentlemen:
We are delivering this letter in connection with an offering of 7 1/4%
Convertible Subordinated Notes due 2004 (the "Notes) which are convertible into
shares of Common Stock, $.001 par value (the "Common Stock"), of Heartport,
Inc. (the "Company").
We hereby confirm that:
1. we are an "accredited investor" within the meaning of Rule
501(a)(1), (2) or (3) under the Securities Act of 1933 (the "Securities Act") or
an entity in which all of the equity owners are accredited investors within the
meaning of Rule 501(a)(1), (2) or (3) under the Securities Act (an
"Institutional Accredited Investor"):
2. (A) any purchase of Notes by us will be for our own account
or for the account of one or more other Institutional Accredited Investors or as
fiduciary for the account of one or more trusts, each of which is an "accredited
investor" within the meaning of Rule 501(a)(7) under the Securities Act and for
each of which we exercise sole investment discretion or (B) we are a "bank,"
within the meaning of Section 3(a)(2) of the Securities Act, or a "savings and
loan association" or other institution described in Section 3(l)(5)(a) of the
Securities Act that is acquiring Notes as fiduciary for the account of one or
more institutions for which we exercise sole investment discretion;
3. in the event that we purchase any Notes, we will acquire
Notes having a minimum principal amount of not less than $100,000 for our own
account or for any separate account for which we are acting;
4. we have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks of
purchasing the Notes; and
5. we are not acquiring Notes with a view to distribution
thereof or with any present intention of offering or selling Notes or the Common
Stock issuable upon conversion thereof, except as permitted below; provided that
the disposition of our property and property of any accounts for which we are
acting as fiduciary shall remain at all times within our control.
<PAGE>
We understand that the Notes are being offered in a transaction not
involving any public offering within the United States within the meaning of the
Securities Act and that the Notes and the shares of Common Stock issuable upon
conversion thereof have not been registered under the Securities Act, and we
agree, on our own behalf and on behalf of each account for which we acquire any
Notes, that if in the future we decide to resell or otherwise transfer such
Notes or the Common Stock issuable upon conversion thereof, such Notes or Common
Stock may be resold or otherwise transferred only (i) to the Company or any
subsidiary thereof, or (ii) inside the United States to a person who is a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) in a transaction meeting the requirements of Rule 144A, or (iii) inside the
United States to an Institutional Accredited Investor that, prior to such
transfer, furnishes to the Trustee or transfer agent for such securities a
signed letter containing certain representations and agreements relating to the
restrictions on transfer of such securities (the form of which letter can be
obtained from such Trustee or transfer agent), or (iv) outside the United States
in a transaction meeting the requirements of Rule 904 under the Securities Act,
or (v) pursuant to the exemption from registration provided by Rule 144 under
the Securities Art (if applicable), or (vi) pursuant to a registration statement
which has been declared effective under the Securities Act (and which continues
to be effective at the time of such transfer), and in each case, in accordance
with any applicable securities laws of any State of the United States or any
other applicable jurisdiction and in accordance with the legends set forth on
the Notes or the Common Stock issuable upon conversion thereof, as the case may
be. We further agree to provide any person purchasing any of the Notes or the
Common Stock issuable upon conversion thereof other than pursuant to clause (vi)
above from us a notice advising such purchaser that resales of such securities
are restricted as stated herein. We understand that the Trustee or transfer
agent for the Notes and the Common Stock will not be required to accept for
registration of transfer any Notes or any shares of Common Stock issued upon
conversion of the Notes except upon presentation of evidence satisfactory to the
Company that the foregoing restrictions on transfer have been complied with. We
further understand that any Notes and any certificates representing Common Stock
will be in the form of definitive physical certificates and that such
certificates will bear a legend reflecting the substance of this paragraph other
than certificates representing Common Stock transferred pursuant to clause (vi)
above.
We acknowledge that the Company, others and you will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
<PAGE>
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK
-----------------------------------
(Name of Purchaser)
By:
--------------------------------
Name:
Title:
Address:
<PAGE>
HEARTPORT, INC.
Reconciliation and Tie Between the Trust Indenture Act of 1939 and
Indenture, dated as of April 15, 1997, between Heartport, Inc. and The Bank of
New York, as Trustee.
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
- --------------- -----------------
<S> <C>
Section 310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8; 8.9; 8.10; 8.11
Section 311 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.13
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.13
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3(a)
Section 312 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1; 6.2(a)
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2(b)
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2(c)
Section 313 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3(a)
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3(a)
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3(a)
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3(b)
Section 314 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.14
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5
Section 315 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1
(d)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(a)
(d)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(b)
(d)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(c)
(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9
Section 316 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7
(a)(1)(A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7
(a)(1)(B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4
-1-
<PAGE>
Section 317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
Section 318 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.7
</TABLE>
- -------------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
-2-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
April 15, 1997 by and among Heartport, Inc., a Delaware corporation (the
"Company") and Morgan Stanley & Co. Incorporated, Goldman Sachs & Co. and Cowen
& Company (the "Initial Purchasers") pursuant to the Placement Agreement, dated
as of April 15, 1997 (the "Placement Agreement"), between the Company and the
Initial Purchasers. In order to induce the Initial Purchasers to enter into the
Placement Agreement the Company has agreed to provide the registration rights
set forth in this Agreement. The execution of this Agreement is a condition to
the closing under the Placement Agreement.
The Company agrees with the Initial Purchasers, (i) for their benefit
as Initial Purchasers and (ii) for the benefit of the holders from time to time
of the Notes (including the Initial Purchasers) and the holders from time to
time of the Common Stock issued upon conversion of the Notes (each of the
foregoing a "Holder" and together the "Holders"), as follows:
1. DEFINITIONS. Capitalized terms used herein without definition
shall have their respective meanings set forth in the Placement Agreement. As
used in this Agreement, the following terms shall have the following meanings:
Affiliate: "Affiliate" means, with respect to any specified person,
(i) any other person directly or indirectly controlling or controlled by, or
under direct or indirect common control with, such specified person or (ii) any
officer or director of such other person. For purposes of this definition, the
term "control" (including the terms "controlling," "controlled by" and "under
common control with") of a person means the possession, direct or indirect, of
the power (whether or not exercised) to direct or cause the direction of the
management and policies of a person, whether through the ownership of voting
securities, by contract, or otherwise.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.
Common Stock: The shares of common stock, $.001 par value per share,
of the Company and any other shares of common stock as may constitute "Common
Stock" for purposes of the Indenture, in each case, as issuable or issued upon
conversion of the Notes.
Damages Accrual Period: See Section 2(e) hereof.
Damages Payment Date: Each of the semi-annual interest payment dates
provided in the Indenture.
Deferral Period: See Section 2(d) hereof.
<PAGE>
Effectiveness Period: The period commencing with the date hereof and
ending on the date that all Registrable Securities have ceased to be Registrable
Securities.
Event: See Section 2(e) hereof.
Event Date: See Section 2(e) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Filing Date: See Section 2(a) hereof.
Holder: See the second paragraph of this Agreement.
Indenture: The Indenture, dated as of April 15, 1997, between the
Company and The Bank of New York, as Trustee, pursuant to which the Notes are
being issued, as amended or supplemented from time to time in accordance with
the terms hereof.
Initial Purchasers: Morgan Stanley & Co. Incorporated, Goldman, Sachs
& Co. and Cowen & Company.
Initial Shelf Registration: See Section 2(a) hereof.
Liquidated Damages: See Section 2(e) hereof.
Losses: See Section 6 hereof.
Managing Underwriters: The investment banking firm or firms that
shall manage or co-manage an Underwritten Offering.
Notes: The 7 1/4% Convertible Subordinated Notes due 2004 of the
Company being issued and sold pursuant to the Placement Agreement and the
Indenture.
Notice Holder: See Section 2(d)(i) hereof.
Placement Agreement: See the first paragraph of this Agreement.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any amendment or prospectus supplement, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
Record Holder: (i) with respect to any Damages Payment Date relating
to any Note as to which any such Liquidated Damages have accrued, the registered
holder of such Note on the record date with respect to the interest payment date
under the Indenture on which such
2
<PAGE>
Damages Payment Date shall occur and (ii) with respect to any Damages Payment
Date relating to any Common Stock as to which any such Liquidated Damages have
accrued, the registered holder of such Common Stock 15 days prior to the next
succeeding Damages Payment Date.
Registrable Securities: (A) The Common Stock of the Company into
which the Notes are convertible or converted, whether or not such Notes have
been converted, and at all times subsequent thereto, and any Common Stock issued
with respect thereto upon any stock dividend, split or similar event until, in
the case of any such Common Stock, (i) it is effectively registered under the
Securities Act and resold in accordance with the Registration Statement covering
it, (ii) it is saleable by the holder thereof pursuant to Rule 144(k) or (iii)
it is sold to the public pursuant to Rule 144, and, as a result of the event or
circumstance described in any of the foregoing clauses (i) through (iii), the
legends with respect to transfer restrictions required under the Indenture
(other than any such legends required solely as the consequence of the fact that
such Common Stock (or the Notes, upon the conversion of which, such Common Stock
was issued or is issuable) is owned by, or was previously owned by, the Company
or an Affiliate of the Company) are removed or removable in accordance with the
terms of the Indenture; (B) the Notes, until, in the case of any such Note, (i)
it is converted into shares of Common Stock in accordance with the terms of the
Indenture, (ii) it is effectively registered under the Securities Act and resold
in accordance with the Registration Statement covering it, (iii) it is saleable
by the holder thereof pursuant to Rule 144(k) or (iv) it is sold to the public
pursuant to Rule 144, and, as a result of the event or circumstance described in
any of the foregoing clauses (ii) through (iv), the legends with respect to
transfer restrictions required under the Indenture (other than any such legends
required solely as the consequence of the fact that such Note is owned by, or
was previously owned by, the Company or an Affiliate of the Company) are removed
or removable in accordance with the terms of the Indenture.
Registration Expenses: See Section 5 hereof.
Registration Statement: Any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Rule 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
Rule 144A: Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.
Selling Period: See Section 2(d)(i) hereof.
3
<PAGE>
Shelf Registration: See Section 2(a) hereof.
Special Counsel: Wilson Sonsini Goodrich & Rosati, Professional
Corporation, or such successor counsel as shall be specified by the Holders of a
majority of the Registrable Securities, the fees and expenses of which will be
paid by the Company pursuant to Section 5 hereof.
Subsequent Shelf Registration: See Section 2(b) hereof.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The Trustee under the Indenture.
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
2. SHELF REGISTRATION.
(a) SHELF REGISTRATION. The Company shall prepare and file with
the SEC, as soon as practicable but in any event on or prior to the date ninety
(90) days following the latest date of original issuance of the Notes (the
"Filing Date"), a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 of the Securities Act (a "Shelf
Registration") registering the resale from time to time by Holders thereof of
all of the Registrable Securities (the "Initial Shelf Registration"). The
Initial Shelf Registration shall be on Form S-3 or another appropriate form
permitting registration of such Registrable Securities for resale by the Holders
in the manner or manners designated by them (including, without limitation, one
or more Underwritten Offerings). The Company shall use reasonable efforts to
cause the Initial Shelf Registration to be declared effective under the
Securities Act as soon as practicable and to keep the Initial Shelf Registration
continuously effective under the Securities Act until the earlier of the
expiration of the Effectiveness Period or the date a Subsequent Shelf
Registration, as defined below, covering all of the Registrable Securities has
been declared effective under the Securities Act.
(b) If the Initial Shelf Registration or any Subsequent Shelf
Registration, as defined below, ceases to be effective for any reason as a
result of the issuance of a stop order by the SEC at any time during the
Effectiveness Period, the Company shall use reasonable efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof, and in any
event shall within thirty (30) days of such cessation of effectiveness amend the
Shelf Registration in a manner reasonably expected to obtain the withdrawal of
the order suspending the effectiveness thereof, or file an additional Shelf
Registration covering all of the Registrable Securities (a "Subsequent Shelf
Registration"). If a Subsequent Shelf Registration is filed, the Company shall
use reasonable efforts to cause the Subsequent Shelf Registration to be declared
effective as soon as practicable after such filing and to keep such Registration
Statement continuously effective until the end of the Effectiveness Period.
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(c) The Company shall supplement and amend the Shelf
Registration if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration, if
required by the Securities Act, or if reasonably requested by the Initial
Purchasers or by the Trustee on behalf of a majority of the Holders of the
Registrable Securities covered by such Registration Statement or by any Managing
Underwriter of such Registrable Securities in the event of an Underwritten
Offering of the Registrable Securities.
(d) Each Holder of Registrable Securities agrees that if such
Holder wishes to sell its Registrable Securities pursuant to a Shelf
Registration and related Prospectus, it will do so only in accordance with this
Section 2(d). Each Holder of Registrable Securities agrees to give written
notice to the Company at least three Business Days prior to any intended
distribution of Registrable Securities under the Shelf Registration, which
notice shall specify the date on which such Holder intends to begin such
distribution and any information with respect to such Holder and the intended
distribution of Registrable Securities by such Holder as may be required to
amend the Registration Statement or supplement the related Prospectus with
respect to such intended distribution of Registrable Securities by such Holder
(the "Requisite Information"). In the event the Holder fails to provide the
Requisite Information in its initial notice of its intention to distribute the
Registrable Securities pursuant to the Registration Statement, the Company will
promptly request such Holder to provide such Requisite Information. As soon as
practicable after the date such notice is provided, and in any event within two
Business Days after such date, the Company shall either:
(i) (A) If necessary, prepare and file with the Commission
a post-effective amendment to the Shelf Registration or a supplement to the
related Prospectus or a supplement or amendment to any document incorporated
therein by reference or file any other required document so that such
Registration Statement will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and so that, as thereafter delivered
to purchasers of the Registrable Securities being sold thereunder, such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; (B) provide each Notice Holder (as defined below) copies of any
documents filed pursuant to Section 2(d)(i)(A); and (C) inform each Notice
Holder that the Company has complied with its obligations in Section 2(d)(i)(A)
(or that, if the Company has filed a post-effective amendment to the Shelf
Registration which has not yet been declared effective, the Company will notify
the Notice Holder to that effect, will use reasonable efforts to secure the
effectiveness of such post-effective amendment and will immediately notify the
Notice Holder when the amendment has become effective); each Holder who has
given notice of intention to distribute such Holder's Registrable Securities in
accordance with Section 2(d) hereof (a "Notice Holder") will sell all or any of
such Registrable Securities pursuant to the Shelf Registration and related
Prospectus only during the 45-day period commencing with the date on which the
Company gives notice, pursuant to Section 2(d)(i)(C), that the Registration
Statement and Prospectus may be used for such purpose (such 45-day period is
referred to as a "Selling Period"). The Notice Holders will not sell any
Registrable Securities pursuant to such
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<PAGE>
Registration Statement or Prospectus after such Selling Period without giving a
new notice of intention to sell pursuant to Section 2(d) hereof and receiving a
further notice from the Company pursuant to Section 2(d)(i)(C) hereof.
(ii) in the event (A) of the happening of any event of the
kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v), or 3(c)(vi)
hereof or (B) that, in the judgment of the Company, it is advisable to suspend
use of the Prospectus for a discrete period of time due to pending material
corporate developments or similar material events that have not yet been
publicly disclosed and as to which the Company believes public disclosure will
be prejudicial to the Company, the Company shall deliver a certificate in
writing, signed by an authorized executive officer of the Company, to the Notice
Holders, the Special Counsel and the Managing Underwriters, if any, to the
effect of the foregoing and, upon receipt of such certificate, each such Notice
Holder's Selling Period will not commence until such Notice Holder's receipt of
copies of the supplemented or amended Prospectus provided for in Section
2(d)(i)(A) hereof, or until it is advised in writing by the Company that the
Prospectus may be used and has received copies of any additional or supplemental
filings that are incorporated or deemed incorporated by reference in such
Prospectus. The Company will use reasonable efforts to ensure that the use of
the Prospectus may be resumed, and the Selling Period will commence, as soon as
practicable and, in the case of a pending development or event referred to in
Section 2(d)(ii)(B) hereof, as soon as the earlier of (x) public disclosure of
such pending material corporate development or similar material event or (y) in
the judgment of the Company, public disclosure of such material corporate
development or similar material event would not be prejudicial to the Company.
Notwithstanding any other provision in this Agreement, the Company shall not
under any circumstances be entitled to exercise its right under this Section
2(d)(ii) to defer the commencement of a Selling Period except as follows: the
Company may defer the commencement of a Selling Period in accordance with this
Section 2(d)(ii) for a period not to exceed 30 days in any three-month period,
or not to exceed an aggregate of 60 days in any 12-month period, and the period
in which a Selling Period is suspended shall not exceed fifteen (15) days unless
the Company shall deliver to such Notice Holders a second notice to the effect
set forth above, which shall have the effect of extending the period during
which such Selling Period is deferred by up to an additional fifteen (15) days,
or such shorter period of time as is specified in such second notice. In no
event shall the Company be permitted to extend the period during which such
Selling Period is deferred (a "Deferral Period") beyond such thirty (30) day
period from and after the date a Notice Holder provides notice to the Company in
accordance with this Section 2(d) of its intention to distribute Registrable
Securities.
(e) The parties hereto agree that the Holders of Registrable
Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with precision, if (i) the Initial Shelf Registration
has not been filed on or prior to the Filing Date, (ii) prior to the end of the
Effectiveness Period, the SEC shall have issued a stop order suspending the
effectiveness of the Shelf Registration or proceedings have been initiated with
respect to the Shelf Registration under Section 8(d) or 8(e) of the Securities
Act, (iii) the aggregate number of days in any one Deferral Period exceeds the
periods permitted pursuant to Section 2(d)(ii) hereof or (iv) the number of
Deferral Periods exceeds the number permitted pursuant to Section 2(d)(ii)
hereof (each of the events of a type described in any of the foregoing
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<PAGE>
clauses (i) through (iv) are individually referred to herein as an "Event," and
the Filing Date in the case of clause (i), the date on which the effectiveness
of the Shelf Registration has been suspended or proceedings with respect to the
Shelf Registration under Section 8(d) or 8(e) of the Securities Act have been
commenced in the case of clause (ii), the date on which the duration of a
Deferral Period exceeds the periods permitted by Section 2(d)(ii) hereof in the
case of clause (iii), and the date of the commencement of a Deferral Period that
causes the limit on the number of Deferral Periods under Section 2(d)(ii) hereof
to be exceeded in the case of clause (iv), being referred to herein as an "Event
Date"). Events shall be deemed to continue until the date of the termination of
such Event, which shall be the following dates with respect to the respective
types of Events: the date the Initial Registration Statement is filed in the
case of an Event of the type described in clause (i), the date that all stop
orders suspending effectiveness of the Shelf Registration have been removed and
the proceedings initiated with respect to the Shelf Registration under Section
8(d) or 8(e) of the Securities Act have terminated, as the case may be, in the
case of Events of the types described in clause (ii), termination of the
Deferral Period which caused the aggregate number of days in any one Deferral
Period to exceed the number permitted by Section 2(d)(ii) to be exceeded in the
case of Events of the type described in clause (iii), and termination of the
Deferral Period the commencement of which caused the number of Deferral Periods
permitted by Section 2(d)(ii) to be exceeded in the case of Events of the type
described in clause (iv).
Accordingly, upon the occurrence of any Event and until such time as
there are no Events which have occurred and are continuing (a "Damages Accrual
Period"), commencing on the Event Date on which such Damages Accrual Period
began, the Company agrees to pay, as liquidated damages, and not as a penalty,
an additional amount (the "Liquidated Damages"): (A)(i) to each holder of a
Note that is a Notice Holder, accruing at a rate equal to one-half of one
percent per annum (50 basis points) on the aggregate principal amount of Notes
held by such Notice Holder and (ii) to each holder of Common Stock that is a
Notice Holder, accruing at a rate equal to one-half of one percent per annum (50
basis points) calculated on an amount equal to the product of (x) the
then-applicable Conversion Price (as defined in the Indenture), times (y) the
number of shares of Common Stock held by such holder; and (B) if the Damages
Accrual Period continues for a period in excess of thirty (30) days from the
Event Date, from and after the end of such thirty (30) days until such time as
there are no Events which have occurred and are continuing, (i) to each holder
of a Note (whether or not a Notice Holder), accruing at a rate equal to one-half
of one percent per annum (50 basis points) on the aggregate principal amount of
Notes held by such holder and (ii) to each holder of Common Stock (whether or
not a Notice Holder), accruing at a rate equal to one-half of one percent per
annum (50 basis points) calculated on an amount equal to the product of (x) the
then applicable Conversion Price (as defined in the Indenture), times (y) the
number of shares of Common Stock held by such holder. Notwithstanding the
foregoing, no Liquidated Damages shall accrue under clause (A) for the preceding
sentence during any period for which Liquidated Damages accrue under clause (B)
of the preceding sentence or as to any Registrable Securities from and after the
expiration of the Effectiveness Period. The rate of accrual of the Liquidated
Damages with respect to any period shall not exceed the rate provided for in
this paragraph notwithstanding the occurrence of multiple concurrent Events.
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<PAGE>
The Company shall pay the Liquidated Damages due on any Notes or
Common Stock by depositing with the Trustee under the Indenture, in trust, for
the benefit of the holders of Notes or Common Stock or Notice Holders, as the
case may be, entitled thereto, at least one Business Day prior to the applicable
Damages Payment Date, sums sufficient to pay the Liquidated Damages accrued or
accruing since the last preceding Damages Payment Date through such Damages
Payment Date. The Liquidated Damages shall be paid by the Company to the Record
Holders on each Damages Payment Date by wire transfer of immediately available
funds to the accounts specified by them or by mailing checks to their registered
addresses as they appear in the Note register (as defined in the Indenture), in
the case of the Notes, and in the register of the Company for the Common Stock,
in the case of the Common Stock, if no such accounts have been specified on or
before the Damage Payment Date; provided, however, that any Liquidated Damages
accrued with respect to any Note or portion thereof called for redemption on a
redemption date, redeemed or repurchased in connection with a Fundamental Change
(as defined in the Indenture) on a repurchase date, or converted into Common
Stock on a conversion date prior to the Damages Payment Date, shall, in any such
event, be paid instead to the holder who submitted such Note or portion thereof
for redemption, repurchase or conversion on the applicable redemption date,
repurchase date or conversion date, as the case may be, on such date (or
promptly following the conversion date, in the case of conversion of a Note).
The Trustee shall be entitled, on behalf of the holders of Notes, holders of
Common Stock and Notice Holders, to seek any available remedy for the
enforcement of this Agreement, including for the payment of such Liquidated
Damages. Notwithstanding the foregoing, the parties agree that the sole damages
payable for a violation of the terms of this Agreement with respect to which
Liquidated Damages are expressly provided shall be such Liquidated Damages.
Nothing shall preclude a Notice Holder or Holder of Registrable Securities from
pursuing or obtaining specific performance or other equitable relief with
respect to this Agreement, in addition to the payment of Liquidated Damages.
All of the Company's obligations set forth in this Section 2(e) which
are outstanding with respect to any Registrable Securities at the time such
security ceases to be a Registrable Security shall survive until such time as
all such obligations with respect to such security have been satisfied in full
(notwithstanding termination of the Agreement pursuant to Section 8(o)).
The parties hereto agree that the Liquidated Damages provided for in
this Section 2(e) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities (other than the Initial
Purchasers) by reason of the failure of the Shelf Registration to be filed or
declared effective or unavailable (absolutely or as a practical matter) for
effecting resales of Registrable Securities, as the case may be, in accordance
with the provisions hereof.
3. REGISTRATION PROCEDURES. In connection with the Company's
registration obligations under Section 2 hereof, the Company shall effect such
registrations to permit the sale of the Registrable Securities in accordance
with the intended method or methods of disposition thereof, and pursuant thereto
the Company shall as expeditiously as possible:
8
<PAGE>
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on any appropriate form under the Securities Act
available for the sale of the Registrable Securities by the Holders thereof in
accordance with the intended method or methods of distribution thereof, and use
reasonable efforts to cause each such Registration Statement to become effective
and remain effective as provided herein; provided, that before filing any such
Registration Statement or Prospectus or any amendments or supplements thereto
(other than documents that would be incorporated or deemed to be incorporated
therein by reference and that the Company is required by applicable securities
laws or stock exchange requirements to file) the Company shall furnish to the
Initial Purchasers, the Special Counsel and the Managing Underwriters of such
offering, if any, copies of all such documents proposed to be filed, which
documents will be subject to the review of the Initial Purchasers, the Special
Counsel and such Managing Underwriters, and the Company shall not file any such
Registration Statement or amendment thereto or any Prospectus or any supplement
thereto (other than such documents which, upon filing, would be incorporated or
deemed to be incorporated by reference therein and that the Company is required
by applicable securities laws or stock exchange requirements to file) to which
the Holders of a majority of the Registrable Securities covered by such
Registration Statement, the Initial Purchasers or the Special Counsel shall
reasonably object in writing within two full Business Days.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable
period specified in Section 2; cause the related Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement and Prospectus during the applicable period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
Registration Statement as so amended or such Prospectus as so supplemented.
(c) Notify the Notice Holders, the Initial Purchasers, the
Special Counsel and the Managing Underwriters, if any, promptly, and (if
requested by any such person) confirm such notice in writing, (i) when a
Prospectus, any Prospectus supplement, a Registration Statement or a
post-effective amendment to a Registration Statement has been filed with the
SEC, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the SEC or
any other federal or state governmental authority for amendments or supplements
to a Registration Statement or related Prospectus or for additional information,
(iii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation or threatening of any proceedings for that purpose,
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (v) of the existence of any fact
or happening of any event which makes any statement of a material fact in such
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue or which would require the
making of any changes in the Registration
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Statement or Prospectus in order that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and that in the case of the Prospectus,
it will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and (vi) of the Company's determination that a post-effective
amendment to a Registration Statement would be appropriate.
(d) Use reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement, or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the earliest possible
moment.
(e) If reasonably requested by the Initial Purchasers or the
Managing Underwriters, if any, or the Holders of a majority of the Registrable
Securities being sold, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment to a Registration Statement such information as the
Initial Purchasers, the Special Counsel, the Managing Underwriters, if any, or
such Holders, in connection with any offering of Registrable Securities, agree
should be included therein as required by applicable law, and (ii) make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as reasonably practicable after the Company has received notification of
the matters to be incorporated in such Prospectus supplement or post-effective
amendment; provided, that the Company shall not be required to take any actions
under this Section 3(e) that are not, in the reasonable opinion of counsel for
the Company, in compliance with applicable law.
(f) Furnish to each selling Holder, the Special Counsel and the
Initial Purchasers, and each Managing Underwriter, if any, without charge, at
least one conformed copy of the Registration Statement or Statements and any
amendment thereto, including financial statements but excluding schedules, all
documents incorporated or deemed to be incorporated therein by reference and all
exhibits (unless requested in writing by such selling Holder, counsel, the
Initial Purchasers or underwriter).
(g) Deliver to each selling Holder, the Special Counsel and the
Initial Purchasers and each Managing Underwriter, if any, in connection with any
offering of Registrable Securities, without charge, as many copies of the
Prospectus or Prospectuses relating to such Registrable Securities (including
each preliminary prospectus) and any amendment or supplement thereto as such
persons may reasonably request; and the Company hereby consents to the use of
such Prospectus or each amendment or supplement thereto by each of the selling
Holders of Registrable Securities and the underwriters, if any, in connection
with any offering and sale of the Registrable Securities covered by such
Prospectus or any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, to
register or qualify or cooperate with the selling Holders, the Managing
Underwriters, if any, and the Special Counsel in connection with the
registration or qualification (or exemption from such registration
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or qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any selling Holder or Managing Underwriter reasonably requests in writing; keep
each such registration or qualification (or exemption therefrom) effective
during the period such Registration Statement is required to be kept effective
and do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by the
applicable Registration Statement; provided, that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where it is
not then so qualified or (ii) take any action that would subject it to general
service of process in suits or to taxation in any such jurisdiction where it is
not then so subject.
(i) Cause the Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies or authorities within the United States, except as may be
required solely as a consequence of the nature of such selling Holder, in which
case the Company will cooperate in all reasonable respects with the filing of
such Registration Statement and the granting of such approvals, as may be
necessary to enable the selling Holder or Holders thereof or the Managing
Underwriters, if any, to consummate the disposition of such Registrable
Securities.
(j) During any Selling Period (other than during a Deferral
Period), immediately upon the existence of any fact or the occurrence of any
event as a result of which a Registration Statement shall contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, or a
Prospectus shall contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, promptly prepare and file (subject to the proviso in
Section 3(a)) a post-effective amendment to each Registration Statement or a
supplement to the related Prospectus or any document incorporated therein by
reference or file any other required document (such as a Current Report on Form
8-K) that would be incorporated by reference into the Registration Statement so
that the Registration Statement shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and so that the
Prospectus will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, as thereafter delivered to the purchasers of the
Registrable Securities being sold thereunder, and, in the case of a
post-effective amendment to a Registration Statement, use its reasonable efforts
to cause it to become effective as soon as practicable.
(k) Enter into such agreements (including, in the event of an
Underwritten Offering, an underwriting agreement in form, scope and substance as
is customary in Underwritten Offerings) and take all such other actions in
connection therewith (including, in the event of an Underwritten Offering, those
reasonably requested by the Managing Underwriters, if any, or the Holders of a
majority of the Registrable Securities being sold) in order to expedite or
facilitate the disposition of such Registrable Securities and in such
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connection, whether or not an underwriting agreement is entered into, and if the
registration is an underwritten registration, (i) make such representations and
warranties, subject to the Company's ability to do so, to the Holders of such
Registrable Securities and the underwriters with respect to the business of the
Company and its subsidiaries, the Registration Statement, Prospectus and
documents incorporated by reference or deemed incorporated by reference, if any,
in each case, in form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings (provided that the scope and substance
shall not be materially different than those contained in the Placement
Agreement) and confirm the same if and when requested; (ii) use its best efforts
to obtain opinions of counsel to the Company and updates thereof (which counsel
and opinions (in form, scope and substance) shall be reasonably satisfactory to
the Managing Underwriters, if any, Special Counsel and the Holders of a majority
of the Registrable Securities being sold) addressed to each of the underwriters
covering the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such Special
Counsel and Managing Underwriters; (iii) use its best efforts to obtain "cold
comfort" letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other certified public
accountants of any business acquired or to be acquired by the Company for which
financial statements and financial data are, or are required to be, included in
the Registration Statement), addressed to each of the Managing Underwriters, if
any, such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with Underwritten
Offerings; and (iv) deliver such documents and certificates as may be reasonably
requested by the Holders of a majority of the Registrable Securities being sold,
the Special Counsel and the Managing Underwriters, if any, to evidence the
continued validity of the representations and warranties of the Company and its
subsidiaries made pursuant to clause (i) above and to evidence compliance with
any customary conditions contained in the underwriting agreement or other
agreement entered into by the Company. The above shall be done at each closing
under such underwriting or similar agreement as and to the extent required
thereunder.
(l) If requested in connection with a disposition of Registrable
Securities pursuant to a Registration Statement, make available for inspection
by a representative of the Holders of Registrable Securities being sold, any
Managing Underwriter participating in any disposition of Registrable Securities,
if any, and any attorney or accountant retained by such selling Holders or
underwriter, financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries, and cause the executive
officers, directors and employees of the Company and its subsidiaries to supply
all information reasonably requested by any such representative, Managing
Underwriter, attorney or accountant in connection with such disposition; subject
to reasonable assurances by each such person that such information will only be
used in connection with matters relating to such Registration Statement;
provided, however, that such persons shall first agree in writing with the
Company that any information that is reasonably and in good faith designated by
the Company in writing as confidential at the time of delivery of such
information shall be kept confidential by such persons and shall be used solely
for the purposes of exercising rights under this Agreement, unless (i)
disclosure of such information is required by court or administrative order or
is necessary to respond to inquiries of regulatory authorities, (ii) disclosure
of such information is required by law (including any disclosure requirements
pursuant to Federal securities laws in connection with the filing of any
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Registration Statement or the use of any prospectus referred to in this
Agreement), (iii) such information becomes generally available to the public
other than as a result of a disclosure or failure to safeguard by any such
person or (iv) such information becomes available to any such person from a
source other than the Company and such source is not bound by a confidentiality
agreement.
(m) Comply with all applicable rules and regulations of the SEC
and make generally available to its securityholders earning statements (which
need not be audited) satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated under
the Securities Act) no later than 45 days after the end of any 12-month period
(or 90 days after the end of any 12-month period if such period is a fiscal
year) (i) commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company
commencing after the effective date of a Registration Statement, which
statements shall cover said 12-month periods.
(n) Cooperate with the selling Holders of Registrable Securities
to facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends; and
enable such Registrable Securities to be in such denominations and registered in
such names as such Holders may request.
(o) Provide the Trustee under the Indenture and the transfer
agent for the Common Stock with printed certificates for the Registrable
Securities which are in a form eligible for deposit with The Depository Trust
Company.
(p) Cause the Common Stock covered by the Registration Statement
to be listed on each securities exchange or quoted on each automated quotation
system on which any of the Company's "Common Stock," as that term is defined in
the Indenture, is then listed or quoted) no later than the date the Registration
Statement is declared effective and, in connection therewith, to the extent
applicable, to make such filings under the Exchange Act (e.g., the filing of a
Registration Statement on Form 8-A) and to have such filings declared effective
thereunder.
(q) Cooperate and assist in any filings required to be made with
the National Association of Securities Dealers, Inc.
4. HOLDER'S OBLIGATIONS. Each Holder agrees, by acquisition of the
Notes and Registrable Securities, that no Holder of Registrable Securities shall
be entitled to sell any of such Registrable Securities pursuant to a
Registration Statement or to receive a Prospectus relating thereto, unless such
Holder has furnished the Company with the notice required pursuant to Section
2(d) hereof and such other information regarding such Holder and the
distribution of such Registrable Securities as may be required to be included in
the Registration Statement or the Prospectus or as the Company may from time to
time reasonably request. The Company may exclude from such registration the
Registrable Securities of any Holder who does not furnish such information
provided above for so long as such information is not so furnished. Each Holder
of Registrable Securities as to which any Registration Statement is being
effected agrees
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promptly to furnish to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such Holder
not misleading. Any sale of any Registrable Securities by any Holder shall
constitute a representation and warranty by such Holder that the information
relating to such Holder and its plan of distribution is as set forth in the
Prospectus delivered by such Holder in connection with such disposition, that
such Prospectus does not as of the time of such sale contain any untrue
statement of a material fact relating to such Holder or its plan of distribution
and that such Prospectus does not as of the time of such sale omit to state any
material fact relating to such Holder or its plan of distribution necessary to
make the statements in such Prospectus, in light of the circumstances under
which they were made, not misleading.
5. REGISTRATION EXPENSES. All fees and expenses incident to the
Company's performance of or compliance with this Agreement shall be borne by the
Company whether or not any of the Registration Statements become effective.
Such fees and expenses shall include, without limitation, (i) all registration
and filing fees (including, without limitation, fees and expenses (x) with
respect to filings required to be made with the SEC or the National Association
of Securities Dealers, Inc. and (y) relating to compliance with federal
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of Special Counsel in connection with Blue Sky qualifications of
the Registrable Securities under the laws of such jurisdictions as the Managing
Underwriters, if any, or Holders of a majority of the Registrable Securities
being sold may designate)), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities in a
form eligible for deposit with The Depository Trust Company and of printing
prospectuses if the printing of prospectuses is requested by the Special Counsel
or the Holders of a majority of the Registrable Securities included in any
Registration Statement), (iii) the reasonable fees and disbursements of the
Trustee and its counsel and of the registrar and transfer agent for the Common
Stock, (iv) messenger, telephone and delivery expenses relating to the
performance of the Company's obligations hereunder, (v) reasonable fees and
disbursements of counsel for the Company and the Special Counsel in connection
with the Shelf Registration (provided that the Company shall not be liable for
the fees and expenses of more than one separate firm, in addition to counsel for
the Company, for all parties participating in any transaction hereunder), (vi)
fees and disbursements of all independent certified public accountants referred
to in Section 3(k)(iii) hereof (including the expenses of any special audit and
"cold comfort" letters required by or incident to such performance) and (vii)
Securities Act liability insurance, to the extent obtained by the Company in its
sole discretion. In addition, the Company shall pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with the listing of the
securities to be registered on any securities exchange on which similar
securities issued by the Company are then listed and the fees and expenses of
any person, including special experts, retained by the Company. Notwithstanding
the provisions of this Section 5, each seller of Registrable Securities shall
pay all underwriting discounts, selling commissions and stock transfer taxes
applicable to the Registrable Securities, all selling expenses and all
registration expenses to the extent that the Company is prohibited by applicable
Blue Sky laws from paying for or on behalf of such seller of Registrable
Securities.
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6. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company shall indemnify
and hold harmless the Initial Purchasers, each Holder and each person, if any,
who controls the Initial Purchasers or any Holder (within the meaning of either
Section 15 of the Securities Act or Section 20(a) of the Exchange Act) from and
against all losses, liabilities, damages and expenses (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) (collectively, "Losses"),
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement or Prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such Losses arise out of or are based upon the
information relating to the Initial Purchasers or any Holder furnished to the
Company in writing by the Initial Purchasers or such Holder expressly for use
therein; provided, that the Company shall not be liable to any Holder of
Registrable Securities (or any person controlling such Holder) to the extent
that any such Losses arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any preliminary
prospectus if either (A)(i) such Holder failed to send or deliver a copy of the
Prospectus with or prior to the delivery of written confirmation of the sale by
such Holder to the person asserting the claims from which such Losses arise and
(ii) the Prospectus would have corrected such untrue statement or alleged untrue
statement or such omission or alleged omission, or (B)(x) such untrue statement
or alleged untrue statement, omission or alleged omission is corrected in an
amendment or supplement to the Prospectus and (y) having previously been
furnished by or on behalf of the Company with copies of the Prospectus as so
amended or supplemented, such Holder thereafter fails to deliver such Prospectus
as so amended or supplemented, with or prior to the delivery of written
confirmation of the sale of a Registrable Security to the person asserting the
claim from which such Losses arise. The Company shall also indemnify each
underwriter and each person who controls such person (within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act) to the
same extent and with the same limitations as provided above with respect to the
indemnification of the Initial Purchasers or the Holders of Registrable
Securities.
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. Each
Holder agrees, and such agreement shall be evidenced by the Holder delivering
the notice described in Section 2(d) hereof, severally and not jointly to
indemnify and hold harmless the Initial Purchasers, the other selling Holders,
the Company, its directors, its officers who sign a Registration Statement, and
each person, if any, who controls the Company, the Initial Purchasers and any
other selling Holder (within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act), from and against all losses arising out
of or based upon any untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary prospectus or arising out of
or based upon any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, to the extent, but only
to the extent, that such untrue statement or omission is contained in any
information relating to such Holder so furnished in writing by such Holder to
the Company expressly for use in such Registration Statement or Prospectus. In
no event shall the liability of
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any selling Holder of Registrable Securities hereunder be greater in amount than
the dollar amount of the proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
either of the two preceding paragraphs, such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (a) the fees and expenses of more than one separate firm (in
addition to any local counsel) for the Initial Purchasers and all persons, if
any, who control the Initial Purchasers within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act, (b) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all Holders and all persons, if any, who control any Holder within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act,
and (c) the fees and expenses of more than one separate firm (in addition to any
local counsel) for the Company, its directors, its officers who sign a
Registration Statement and each person, if any, who controls the Company within
the meaning of either such Section, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Company, and such directors, officers and control persons of the Company, such
firm shall be designated in writing by the Company. In such case involving the
Initial Purchasers and persons who control the Initial Purchasers, such firm
shall be designated in writing by Morgan Stanley & Co. Incorporated. In such
case involving the Holders and such persons who control Holders, such firm shall
be designated in writing by the Holders of the majority of Registrable
Securities sold pursuant to the Registration Statement. The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party, shall not have reimbursed the indemnified party in
accordance
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with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability or claims
that are the subject matter of such proceeding.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 6 is unavailable to an indemnified party under Section 6(a) or 6(b)
hereof in respect of any Losses or is insufficient to hold such indemnified
party harmless, then each applicable indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses, (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
or parties on the one hand and the indemnified party or parties on the other
hand or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such Losses, as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the total net
proceeds from the initial placement (before deducting expenses) of the Notes
pursuant to the Placement Agreement. Benefits received by the Initial
Purchasers shall be deemed to be equal to the total purchase discounts and
commissions received by them pursuant to the Placement Agreement and benefits
received by any other Holders shall be deemed to be equal to the value of
receiving Notes registered under the Securities Act. Benefits received by any
underwriter shall be deemed to be equal to the total underwriting discounts and
commissions, as set forth on the cover page of the Prospectus forming a part of
the Registration Statement which resulted in such Losses. The relative fault of
the Holders on the one hand and the Company on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Holders or by the Company
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Holders'
respective obligations to contribute pursuant to this paragraph are several in
proportion to the respective number of Registrable Securities they have sold
pursuant to a Registration Statement, and not joint.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method or allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the Losses
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding this Section 6(d), an
indemnifying party that is a selling Holder of Registrable Securities shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities sold by such indemnifying party and
17
<PAGE>
distributed to the public were offered to the public exceeds the amount of any
damages which such indemnifying party has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
The indemnity, contribution and expense reimbursement obligations of
the Company hereunder shall be in addition to any liability the Company may
otherwise have hereunder, under the Placement Agreement or otherwise. The
provisions of this Section 6 shall survive so long as Registrable Securities
remain outstanding, notwithstanding any transfer of the Registrable Securities
by any Holder or any termination of this Agreement.
The indemnity and contribution provisions contained in this Section 6
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Initial Purchasers, any Holder or any person controlling any Holder, or the
Company, its officers or directors or any person controlling the Company and
(iii) the sale of any Registrable Securities by any Holder.
7. INFORMATION REQUIREMENTS.
(a) The Company shall file the reports required to be filed by
it under the Securities Act and the Exchange Act, and if at any time the Company
is not required to file such reports, it will, upon the request of any Holder of
Registrable Securities, make publicly available other information so long as
necessary to permit sales pursuant to Rule 144 and Rule 144A under the
Securities Act. The Company further covenants that it will cooperate with any
Holder of Registrable Securities and take such further reasonable action as any
Holder of Registrable Securities may reasonably request (including, without
limitation making such reasonable representations as any such Holder may
reasonably request), all to the extent required from time to time to enable such
Holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144 and Rule 144A
under the Securities Act. Upon the request of any Holder of Registrable
Securities, the Company shall deliver to such Holder a written statement as to
whether it has complied with such filing requirements. Notwithstanding the
foregoing, nothing in this Section 7 shall be deemed to require the Company to
register any of its securities under any section of the Exchange Act.
(b) The Company shall file the reports required to be filed by
it under the Exchange Act and shall comply with all other requirements set forth
in the instructions to Form S-3 in order to allow the Company to be eligible to
file registration statements on Form S-3.
8. MISCELLANEOUS.
(a) REMEDIES. In the event of a breach by the Company of its
obligations under this Agreement, each Holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement; provided that the sole damages payable
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<PAGE>
for a violation of the terms of this Agreement for which Liquidated Damages are
expressly provided pursuant to Section 2(e) hereof shall be such Liquidated
Damages. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) NO CONFLICTING AGREEMENTS. The Company has not, as of the
date hereof and shall not, on or after the date of this Agreement, enter into
any agreement with respect to its securities which conflicts with the rights
granted to the Holders of Registrable Securities in this Agreement. The Company
represents and warrants that the rights granted to the Holders of Registrable
Securities hereunder do not in any way conflict with the rights granted to the
holders of the Company's securities under any other agreements.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of a majority of the then outstanding Common Stock constituting Registrable
Securities (with Holders of Notes deemed to be the Holders, for purposes of this
Section, of the number of outstanding shares of Common Stock into which such
Notes are convertible). Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and that does not directly
or indirectly affect the rights of other Holders of Registrable Securities may
be given by Holders of at least a majority of the Registrable Securities being
sold by such Holders; provided, that the provisions of this sentence may not be
amended, modified, or supplemented except in accordance with the provisions of
the immediately preceding sentence.
(d) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing and shall be deemed given (i)
when made, if made by hand delivery, (ii) upon confirmation, if made by
telecopier or (iii) one business day after being deposited with a reputable
next-day courier, postage prepaid, to the parties as follows:
(i) if to a Holder of Registrable Securities, at the most
current address given by such Holder to the Company in accordance with the
provisions of Section 8(e);
(ii) if to the Company, to:
Heartport, Inc.
200 Chesapeake Drive
Redwood City, CA 94063
Attention: Bradford J. Shafer, Esq.
Telecopy No.: (415) 482-4436 (Confidential)
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with a copy to:
Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP
155 Constitution Drive
Menlo Park, CA 94025
Attention: Jay K. Hachigian, Esq.
Telecopy No.: (415) 321-2800
and
(iii) if to the Special Counsel to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Menlo Park, CA 94025-1050
Attention: David J. Segre, Esq.
Telecopy No.: (415) 493-6811
or to such other address as such person may have furnished to the other persons
identified in this Section 8(d) in writing in accordance herewith.
(e) OWNER OF REGISTRABLE SECURITIES. The Company will maintain,
or will cause its registrar and transfer agent to maintain, a register with
respect to the Registrable Securities in which all transfers of Registrable
Securities of which the Company has received notice will be recorded. The
Company may deem and treat the person in whose name Registrable Securities are
registered in such register of the Company as the owner thereof for all
purposes, including without limitation, the giving of notices under this
Agreement.
(f) APPROVAL OF HOLDERS. Whenever the consent or approval of
Holders of a specified percentage of Registrable Securities is required
hereunder, (i) Holders of Notes shall be deemed to be Holders, for such
purposes, of the number of outstanding shares of Common Stock into which such
Notes are convertible and (ii) Registrable Securities held by the Company or its
affiliates (as such term is defined in Rule 405 under the Securities Act) (other
than the Initial Purchasers or subsequent Holders of Registrable Securities if
such subsequent Holders are deemed to be such affiliates solely by reason of
their holdings of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
(g) SUCCESSORS AND ASSIGNS. Any person who purchases any
Registrable Securities from an Initial Purchasers shall be deemed, for purposes
of this Agreement, to be an assignee of such Initial Purchasers. This Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties and shall inure to the benefit of and be binding upon each
Holder of any Registrable Securities.
(h) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed
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shall be deemed to be original and all of which taken together shall constitute
one and the same agreement.
(i) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
(k) SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated thereby, and the parties hereto
shall use their best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, illegal, void or unenforceable.
(l) ENTIRE AGREEMENT. This Agreement is intended by the parties
as a final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and the registration rights
granted by the Company with respect to the Registrable Securities. Except as
provided in the Placement Agreement, there are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Company with respect to
the Registrable Securities. This Agreement supersedes all prior agreements and
understandings among the parties with respect to such registration rights.
(m) ATTORNEYS' FEES. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party, as determined by the court,
shall be entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
(n) FURTHER ASSURANCES. Each of the parties hereto shall use
all reasonable efforts to take, or cause to be taken, all appropriate action, do
or cause to be done all things reasonably necessary, proper or advisable under
applicable law, and execute and deliver such documents and other papers, as may
be required to carry out the provisions of this Agreement and the other
documents contemplated hereby and consummate and make effective the transactions
contemplated hereby.
(o) TERMINATION. This Agreement and the obligations of the
parties hereunder shall terminate upon the end of the Effectiveness Period,
except for any liabilities or obligations under Sections 4, 5 or 6 hereof and
the obligations to make payments of and provide
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for Liquidated Damages under Section 2(e) hereof to the extent such damages
accrue prior to the end of the Effectiveness Period, each of which shall remain
in effect in accordance with their terms.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
HEARTPORT, INC.
By: /s/ David B. Singer
-----------------------------------------
Name: David B. Singer
Title: Senior Vice President, Finance and
Chief Financial Officer
Accepted as of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
GOLDMAN SACHS & CO.
COWEN & COMPANY
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Katina Dorton
-------------------------------
Katina Dorton, Vice President
<PAGE>
EXHIBIT 4.7
FORM OF AMENDMENT NO. 1
TO
RIGHTS AGREEMENT
THIS AMENDMENT NO. 1 TO THE RIGHTS AGREEMENT (the "Amendment") is
made as of the 26th day of March, 1997, by and between Heartport, Inc., a
Delaware corporation (the "Company"), and Boston Equiserve Limited
Partnership, formerly The First National Bank of Boston (the "Rights Agent")
with respect to that certain Rights Agreement, dated April 25, 1996, between
the Company and the Rights Agent.
RECITALS
WHEREAS, the Board of Directors has deemed it to be in the best
interests of the Company to issue unsecured debentures convertible into
Common Stock of the Company (the "Notes");
WHEREAS, the Rights Agreement does not provide for the issuance of
Rights Certificates to holders of the Notes upon conversion of the Notes into
the Common Stock of the Company; and
WHEREAS, in connection with the offering and sale of the Notes, the
Company intends to, among other things, amend the Rights Agreement as follows:
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. DEFINITIONS. Unless otherwise indicated, capitalized words and
terms which are defined in the Rights Agreement shall have the same meaning
where used herein.
2. AMENDMENTS. The following provisions of the Rights Agreement
shall be amended as follows; unless otherwise specified, textual
cross-references to specific sections of the Rights Agreement shall not be
modified:
a. The heading to Section 11, paragraph (a) of the Rights Agreement
is hereby amended and renumbered as Section 11, paragraph (a), subsection (i);
b. The heading to Section 11, paragraph (a), subsection (i) of the
Rights Agreement is hereby amended and renumbered as Section 11, paragraph
(a), subsection (ii) and shall read in its entirety as follows:
"(ii) Subject to the following paragraph of this subparagraph (ii) and
to Section 24 of this Agreement, in the event any Person shall become an
Acquiring Person, each holder of a Right shall thereafter have a right
to receive, upon exercise thereof at a price equal to the then current
Purchase Price multiplied by the number of one one-thousandths of a
Preferred Share for which a Right is then exercisable, in accordance
with terms of this Agreement and in lieu of Preferred Shares, such
number of Common Shares of the Company as shall equal the result
<PAGE>
obtained by (x) multiplying the then current Purchase Price by the
number of one one-thousandths of a Preferred Share for which a Right is
then exercisable and dividing that product by (y) 50% of the then
current per share market price of the Company's Common Shares
(determined pursuant to Section 11(d) hereof) on the date such Person
became an Acquiring Person. In the event that any Person shall become an
Acquiring Person and the Rights shall then be outstanding, the Company
shall not take any action that would eliminate or diminish the benefits
intended to be afforded by the Rights.
"From and after the occurrence of such an event, any Rights that are or
were acquired or beneficially owned by such Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) on or after the earlier
of (x) the date of such event and (y) the Distribution Date shall be
void and any holder of such Rights shall thereafter have no right to
exercise such Rights under any provision of this Agreement. No Right
Certificate shall be issued pursuant to Section 3 and 22 that represents
Rights beneficially owned by an Acquiring Person whose Rights would be
void pursuant to the preceding sentence or any Associate or Affiliate
thereof; no Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate thereof
or to any nominee of such Acquiring Person, Associate or Affiliate; and
any Right Certificate delivered to the Rights Agent for transfer to an
Acquiring Person whose Rights would be void pursuant to the preceding
sentence or any Associate or Affiliate thereof shall be canceled."
c. The heading to Section 11, paragraph (a), subsection (ii) is
hereby amended and renumbered as Section 11, paragraph (a), subsection
(iii);
d. The heading to Section 11, paragraph (d) is hereby amended
and renumbered as Section 11, paragraph (d), subsection (i);
e. The heading to Section 11, paragraph (d), subsection (i) is
hereby amended and renumbered as Section 11, paragraph (d), subsection
(ii);
f. Section 22 of the Agreement is hereby amended to read in
its entirety as follows:
"Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its
Board of Directors to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other securities or
property purchasable under the Right Certificates made in accordance
with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution
Date and prior to the redemption or expiration of the Rights, the
Company (a) shall, with respect to Common Shares so issued or sold
pursuant to the exercise of stock options or under any employee plan or
arrangement or upon the exercise, conversion or exchange of other
securities of the Company outstanding at the date hereof or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company and (b) may, in any other case, if deemed necessary or
appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection
with such issuance or sale; PROVIDED, HOWEVER, that (i) no such Rights
Certificate shall be issued and this sentence shall be null and void AB
INITIO if, and to the extent that, such issuance or this sentence would
create a significant risk of or result in material adverse tax
consequences to the Company or the Person to whom such Rights
Certificate would be issued or would create a significant risk of or
result in such options' or employee plans' or arrangements' failing to
qualify for otherwise available special tax treatment and (ii) no such
Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the
issuance thereof.
<PAGE>
3. EFFECTIVE DATE. This Amendment shall be deemed to be effective
as of the date of the Rights Agreement.
4. CONTINUED VALIDITY OF AGREEMENT. Except as amended hereby, the
Agreement shall continue in full force and effect as originally constituted
and is ratified and affirmed by the parties hereto.
5. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to the Rights Agreement to be duly executed as of the date first above
written.
HEARTPORT, INC.
By:
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Name:
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Title:
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BOSTON EQUISERVE
LIMITED PARTNERSHIP
By:
---------------------------------
Name:
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Title:
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<PAGE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
HEARTPORT, INC. ANNOUNCES OFFERING OF CONVERTIBLE SUBORDINATED NOTES
REDWOOD CITY, CALIFORNIA, APRIL 15, 1997 -- Heartport, Inc. (Nasdaq: HPRT)
announced today that, subject to market conditions, it is seeking to raise
approximately $75 million (excluding an option to purchase up to an
additional $11.25 million principal amount of notes to cover over-allotments,
if any) through an offering of convertible subordinated notes within the
United States to qualified institutional investors and outside the United
States to non-U.S. investors. The notes would have a term of seven years and
be convertible into Heartport Common Stock. No other terms were disclosed.
Heartport stated that it expects to use the net proceeds of the offering for
funding of capital expenditures related to the expansion of its manufacturing
capacity and facilities, sales and marketing activities, research and
development, clinical trials, working capital and general corporate purposes.
The securities being offered will not be registered under the Securities Act
of 1933, as amended, or applicable state securities laws, and may not be
offered or sold in the United States absent registration under the Securities
Act of 1933 and applicable state securities laws or available exemptions from
registration requirements.
Note: Except for the historical information contained herein, this press
release contains forward-looking statements, the accuracy of which are
necessarily subject to risks and uncertainties. Actual events or results may
differ materially due to factors set forth from time to time in Heartport's
filings with the Securities and Exchange Commission, including its 1996
Annual Report on Form 10-K.
<PAGE>
EXHIBIT 99.2
FOR IMMEDIATE RELEASE
HEARTPORT RAISES $75 MILLION THROUGH OFFERING OF CONVERTIBLE SUBORDINATED
NOTES
REDWOOD CITY, CALIF., APRIL 18, 1997 -- Heartport, Inc. (Nasdaq: HPRT),
announced today that the Company has closed its offering of convertible
subordinated notes to qualified institutional investors in the United States.
The Company raised $75 million (excluding the option to purchase up to an
additional $11.25 million principal amount of notes to cover
over-allotments, if any). The notes have a term of seven years with an
interest rate of 7 1/4 percent per year, and will be convertible into
Heartport Common Stock at a price of $28.958 per share. No other terms were
disclosed.
Heartport expects to use the net proceeds of the offering to fund capital
expenditures related to the expansion of its manufacturing capacity and
facilities, sales and marketing activities, research and development clinical
trials, working capital, and general corporate purposes.
The securities offered were not registered under the Securities Act of 1933,
as amended, or applicable state securities laws, and may not be offered or
sold in the United States absent registration under the Securities Act of
1933 and applicable state securities laws or available exemptions from
registration requirements.
Heartport, Inc., is a cardiovascular device company advancing the frontiers
of cardiac surgery by developing, manufacturing, and marketing
Port-Access-TM- minimally invasive cardiac surgery systems for major heart
surgery. The Company's Port-Access Systems are designed to allow surgeons to
perform a wide range of heart operations through small incisions, or "ports,"
between the ribs, without the need to crack open the chest as is required in
conventional heart surgery. Heartport believes that its systems have the
potential to enable surgeons to achieve clinical outcomes equal to those of
conventional open-chest heart surgery, with the added benefits of reduced
trauma, complications, pain, and scarring; shortened hospital stays and
recovery times and lower overall costs.
Note: Except for the historical information contained herein, this press
release contains forward-looking statements, the accuracy of which are
necessarily subject to risks and uncertainties. Actual events or results may
differ materially due to factors set forth from time to time in Heartport's
filings with the Securities and Exchange Commission, including its 1996
Annual Report on Form 10-K.
